24 Jun ONLINE BANKING E-PAYMENTS AS BUILDING BLOCKS OF THE PAN-EUROPEAN PAYMENT ECOSYSTEM
ONLINE BANKING E-PAYMENTS AS BUILDING BLOCKS OF THE PAN-EUROPEAN PAYMENT ECOSYSTEM
Four major European OBeP solutions have started since last year a joint open working table to discuss and address common issues with the aim to prepare common responses to the European digital payment market demands.
Payments innovations are like all other sorts of innovations: some are short-lived by letting the industry make a small step, other innovations have much broader impact by contributing significant business value to market participants. A common factor of successful innovations is that they build on a proven existing market base that works as a steppingstone.
In many industry sectors, the disruption caused by the Covid-19 crisis is pushing businesses to re-assess the value of existing assets and run cost-benefits analyses. With the shift of consumer shopping habits towards digital commerce and hence digital payments caused by the current outbreak, consumers, merchants, public administrations, banks and other payments service providers privilege payments methods they can afford during recession and that provide the strongest protection against fraud losses.
With the changing contexts for digital commerce, from web-based to mobile, and to voice- and AI- driven, payment solutions have to constantly adapt to fulfil the expectation of merchants in maximizing the contribution to their business. In this regard, payment methods are mainly selected on the criterion of optimal contribution to reach and conversion.
Online Banking e-Payment (OBeP) solutions basically enable consumers to make digital irrevocable payments directly from their payments account to the account of the payee. Authentication by the payer is usually performed using the strong customer authentication mechanisms provided by the account servicing financial institution. In principle OBeP solutions can be offered through all digital channels and devices, with a clear shift to mobile. Examples are iDEAL in the Netherlands, eps in Austria, giropay in Germany and MyBank in Italy and Spain.
Recent developments in Europe are focusing on PSD2, the Request-to-Pay scheme of the European Payments Council and the European Payments Initiative with the aim to build an innovative and globally competitive European payment market while strengthening the position of the euro as a global currency. These initiatives have their merits and we strongly believe OBeP solutions can bring additional advantages that are valuable in the current context. The trust of users in a specific brand or logo, the contractual framework clearly setting out the rights and obligations of all actors in the payment chain are the basis for the success of OBeP solutions along with the uniform and seamless integration with SEPA standards allowing easy clearing, settlement and reconciliation. The fact that payers can benefit from all these advantages without additional onboarding or registration provides the necessary reach to critical mass adoption.
OBeP solutions exist already for 15 years and have proven to be a solid basis for digital commerce payments in all sorts and forms. They do not require heavy investments and can therefore be offered to merchants, who welcome it, against fair costs. From a consumer and payer point of view, OBePs offer an easy and seamless way to make digital payments conveniently, direct from their bank account and a trusted means to protect their digital identity.
Finally, OBePs are a good basis for value-add services (VAS) of all kinds, such as ticketing, loyalty solutions or identity attributes verification (age, IBAN, name). VAS suppliers are looking for payment methods that can be seamlessly integrated in such services and are fit-for-purpose in other contexts such as P2P transfers, bill payments and physical point-of-interaction payments with QR codes.
Online Banking e-Payments are natural building blocks for the future of digital payments in Europe and if applied on a pan-European scale can avoid further fragmentation and limited geographical reachability of domestic solutions. The complementarity with cards and other initiatives gives the right coverage to meet all market needs in Europe going beyond the B2C segment. In principle, all use cases (C2C, C2B, B2C, B2B and C2G) can be facilitated by OBeP solutions, in particular as credit transfer-based solutions are ideal for pushing instant payment as new normal in the context of e-commerce. Thus, OBeP solutions support the digitalisation of the European economy and strengthen the internal market.
Based on the above, four major European OBeP solutions have started since last year a joint working table to discuss and address common issues with the aim to prepare common responses to the European digital payment market demands.
Of course, this table is open to any other OBeP solution and the initiators would welcome a broad participation of all interested parties, in order to form a coalition of the willing and become the partner of choice for the European institutions.
This letter has been co-signed by the following organisations:
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24 Jun 2020