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European Banks to challenge US payment providers.

Summary

According to Financial Times report, European financial institutions are planning to take on US based giants such as Apple (Pay), PayPal, MasterCard and Visa. So far more than 30 banks have agreed to take part of European Payment Initiative. This initiative which includes institutions such as Deutsche Bank, BNP Paribas, ING, UniCredit and Santander which makes up more than half of all payments in Europe and has gathered €30M from its backers. First payments using this system is expected to start as early as 2022.

 

Quotes

Quote

Card payments in Europe are predominantly processed by US-based companies. Four in five transactions in Europe are handled by Mastercard and Visa, according to EuroCommerce, a lobby group of European retailers.

 

Joachim Schmalzl warned that such a dominant market share could hurt consumers and merchants — pointing to relatively high fees as well as questions over data protection. “We want to offer an alternative to this oligopoly and give merchants and consumers in Europe a real choice,” he said.

 

My thoughts

In my opinion this is a necessary move to provide both an alternative to US payment backbone and to separate US-EU financial institutions when politics don't agree on decisions such banking access to US sanctioned countries.

 

Sources

 https://www.ft.com/content/f274255d-eb96-44fe-90e9-fe5532cc47ac

https://www.pymnts.com/news/payments-innovation/2021/european-payments-initiative-looking-to-topple-us-fintechs/

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I think it's necessary for Europe to build their own system for this.

 

Imagine the chaos if, down the line, some trade tensions prevented Apple and Google from providing payment services in Europe - with the ever-increasing popularity of such services, and the reduction in use of cash, it could be extremely problematic.

 

My hope is that European banks will stop allowing customers to register with Apple/Google Pay once this system is up and running - otherwise, a lot of people won't bother switch from either what they were using before, or what their phone provider advertised to them when they first set it up (I smell an anti-trust lawsuit there!)

 

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While I do think European competition can be good for the payment processing industry (increased competition is always good for consumers) I do have to wonder how effective it will be.  While the list of banks that have signed up for this project is impressive, it is no indicator of what the adoption it will be like. As far as I can tell, other than government related payments (I’m assuming), businesses and consumers will have no real incentive to use this system.

 

Also, are there any other non-paywalled sources for this? I’d like to read more into this but I don’t have a Financial Times subscription.

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9 minutes ago, JLO64 said:

While I do think European competition can be good for the payment processing industry (increased competition is always good for consumers) I do have to wonder how effective it will be.  While the list of banks that have signed up for this project is impressive, it is no indicator of what the adoption it will be like. As far as I can tell, other than government related payments (I’m assuming), businesses and consumers will have no real incentive to use this system.

 

Also, are there any other non-paywalled sources for this? I’d like to read more into this but I don’t have a Financial Times subscription.

Added another one, sadly there aren't that many recent and relevant news on it. This is just an alternative to US payment systems. In order for EPI to be successful, it really has to offer more IMO. Lower fees and faster transactions won't cut it. Sure alternatives are good but there are already many local alternatives in many European countries. EPI is trying to be a unified solution with little innovation. 

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1 hour ago, Levent said:

Summary

According to Financial Times report, European financial institutions are planning to take on US based giants such as Apple (Pay), PayPal, MasterCard and Visa. So far more than 30 banks have agreed to take part of European Payment Initiative. This initiative which includes institutions such as Deutsche Bank, BNP Paribas, ING, UniCredit and Santander which makes up more than half of all payments in Europe and has gathered €30M from its backers. First payments using this system is expected to start as early as 2022.

 

Quotes

 

My thoughts

In my opinion this is a necessary move to provide both an alternative to US banking backbone and to separate US-EU financial institutions when politics don't agree on decisions such banking access to US sanctioned countries.

 

Sources

 https://www.ft.com/content/f274255d-eb96-44fe-90e9-fe5532cc47ac

https://www.pymnts.com/news/payments-innovation/2021/european-payments-initiative-looking-to-topple-us-fintechs/

What might be interesting is how they apply, or avoid censorship.

 

US payment options get a lot of heat for dealing with the adult industry, but relatively no scrutiny when dealing with weapons.

 

If an EU-backed alternative starts encroaching on their home turf, they might actually have an incentive to treat all transactions fairly, not just the ones they can sell your private info marketing lists.

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1 minute ago, Kisai said:

What might be interesting is how they apply, or avoid censorship.

 

US payment options get a lot of heat for dealing with the adult industry, but relatively no scrutiny when dealing with weapons.

 

If an EU-backed alternative starts encroaching on their home turf, they might actually have an incentive to treat all transactions fairly, not just the ones they can sell your private info marketing lists.

Great point there, most adult video companies are incorporated in Cyprus due to Cyprus being a tax haven and part of the EU. I never thought about that. This will have a noticeable impact on their business if EPI allows processing of their submissions. I am all for it, as long as they don't just attempt to replace MasterCard with a as evil local alternative.

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... How exactly do they plan to beat the convenience of me putting my apple watch against a payment terminal? They stop supporting it, I move banks.

KBC has tried selling their own "nfc" bracelets and keychains, but after many years I've yet to see one in the wild. Meanwhile, I saw a ton of people start using Apple Pay once they finally added support for it.

 

Or are they just creating yet another online wallet ala Paypal or Venmo? And if so... I guess I wish them well.

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Hmm, we have ELO here, but it relies on the Discover/Diners Club for most international operations. None of the european banks that operate here are part of the ELO consortium... Santander is the worst offender, since it is the 5th largest bank around here.

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31 minutes ago, elfensky said:

... How exactly do they plan to beat the convenience of me putting my apple watch against a payment terminal? They stop supporting it, I move banks.

KBC has tried selling their own "nfc" bracelets and keychains, but after many years I've yet to see one in the wild. Meanwhile, I saw a ton of people start using Apple Pay once they finally added support for it.

 

Or are they just creating yet another online wallet ala Paypal or Venmo? And if so... I guess I wish them well.

 

I would assume they plan to replace the chip and pin from the US vendors in their bank cards with their own chip and pin implementation.

 

2 hours ago, Kisai said:

What might be interesting is how they apply, or avoid censorship.

 

US payment options get a lot of heat for dealing with the adult industry, but relatively no scrutiny when dealing with weapons.

 

If an EU-backed alternative starts encroaching on their home turf, they might actually have an incentive to treat all transactions fairly, not just the ones they can sell your private info marketing lists.

 

This and the whole sanctions thing are likely to be the core reasons behind it. This isn't the only thing the EU has been pushing recently when it comes to Independence from foreign sources. They're not making waves but there's a clear "We like you, but we don't need you" vibe coming off a lot of their moves like this to establish independent EU based tech ventures. I'll leave it there as i'm skirting politics enough as it is there.

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I never understood why the governments never made their own card processing systems like how they print and distribute their own physical money

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25 minutes ago, poochyena said:

I never understood why the governments never made their own card processing systems like how they print and distribute their own physical money

 

Realistically, you don't want the ones responsible for spending your money also able to tell you how to spend it. I guess.

 

Like printing money has very little tracking except for the serial numbers, but the serial numbers only come into play when the money is printed and returned to the central bank, it's pretty much not tracked at any other point.

 

If they just issued every tax-payer a debit card that worked with conventional payment systems (eg Canada has Interac) it would make tax processing extremely simplified as the government can just query the payment processor for a list of everything you bought, and if you flagged it as a business or personal expense, and just straight up decide if it wants to allow it by looking for how many self-employed people write off expenses from the same businesses.

 

Like to a certain extent, I don't want the government to know what I'm buying unless I tell them I've bought it, to write it off. There are things I could additionally write off, but I either forgot about it, or didn't feel it got used for the business enough. If I decide to buy a bunch of random objects that altogether could build a bomb or precursors to a drug lab, or a bitcoin farm, I don't want the government telling me no, or coming after me because I had a legitimate reason to buy that stuff.

 

On the other side of that, payment processors should be extremely transparent about what they will permit, because over-stepping will completely annihilate legitimate businesses that just so happen to do everything exactly the same as the illegal business but don't actually produce the illegal product.

 

IMO, gambling really should be the one thing that payment processors should restrict, just like ApplePay or any other intermediary, because it's easy for the person doing the gambling to easily spend themselves into debt through an addictive behavior, but that doesn't mean they should full stop prevent it, rather they should put a monthly spending budget feature for discretionary spending and if "gambling" is set to zero, just block gambling spend, along with all video game microtransactions/IAP's.

 

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While the idea is good, knowing the absolute shitshow that's EU bureaucracy, we'll have to sit down and see where this goes

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23 minutes ago, Kisai said:

If they just issued every tax-payer a debit card that worked with conventional payment systems (eg Canada has Interac) it would make tax processing extremely simplified as the government can just query the payment processor for a list of everything you bought, and if you flagged it as a business or personal expense, and just straight up decide if it wants to allow it by looking for how many self-employed people write off expenses from the same businesses.

that sounds like heaven

 

24 minutes ago, Kisai said:

I don't want the government to know what I'm buying

huh? We're talking about credit card processing, like what visa or any of the other companies do. They don't know what I buy.

 

27 minutes ago, Kisai said:

it's easy for the person doing the gambling to easily spend themselves into debt through an addictive behavior

but people can spend themselves into debt without gambling. And didn't you just say " you don't want the ones responsible for spending your money also able to tell you how to spend it. "

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22 minutes ago, poochyena said:

 

huh? We're talking about credit card processing, like what visa or any of the other companies do. They don't know what I buy.

Actually, they do. That's their entire business.

https://www.fastcompany.com/90490923/credit-card-companies-are-tracking-shoppers-like-never-before-inside-the-next-phase-of-surveillance-capitalism

 

https://www.aclu.org/blog/privacy-technology/consumer-privacy/why-dont-we-have-more-privacy-when-we-use-credit-card

 

 

Quote

but people can spend themselves into debt without gambling. And didn't you just say " you don't want the ones responsible for spending your money also able to tell you how to spend it. "

This goes into the health/mental-health aspect of spending. You need to voluntarily turn the limit on, by which you consent to sharing that specific spending element. Like similar things could be setup for Alcohol, or legal drugs, just to discourage the user from spending themselves into debt.

 

People who are up to their ears in debt, are told to cut up their cards. If they declare bankruptcy, they often have to close all their credit accounts and consolidate it into one, and can't get new ones for a few years.

 

So if you kinda suck at impulse control, then yes, you should have the limits self-imposed, and that comes at the expense of letting the card company explicitly being permitted to know what you are spending money on.

 

If that was controlled by the government, they could impose that on you. That's the difference. Some right-wing government might decide to impose a prohibition on some moral sin (eg cannabis), and then another later left-wing goverment might undo that prohibition and instead impose a limit on consuming snack foods to combat obesity.

 

Quite literately you don't want the government to know what you're buying because that turns into a situation where the government is intruding into your personal life. 

 

Now private businesses, are sharing this information already, and well, this isn't that far from the truth:

 

Put too much stuff together and you could star being denied insurance coverage because of things you purchased. That's why people are so concerned about genetic databases being owned by private companies, since those are ripe for abuse by insurance companies, never mind law enforcement.

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Nothing good will come from this...

 

23 minutes ago, xtroria said:

While the idea is good, knowing the absolute shitshow that's EU bureaucracy

Exactly!

 

They will also never have something painless like paypal  pay later or paypal credit...

 

 

 

 

I'm actually one of those people who thinks that anonymity is overrated. Some people confuse privacy and anonymity and think they go hand in hand, and that protecting privacy means that you need to protect anonymity. I think that's wrong. Anonymity is important if you're a whistle-blower, but if you cannot prove your identity, your crazy rant on some social-media platform shouldn't be visible, and you shouldn't be able to share it or like it.

 

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15 minutes ago, Mark Kaine said:

They will also never have something painless like paypal  pay later or paypal credit...

Why not? 

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8 minutes ago, gabrielcarvfer said:

Why not? 

because itll be a lot more bureaucratic, harder to get, less secure, and probably at worse conditions.

Aka no more new Nvidia GPU for me. 😕

 

 

 

And in turn paypal will worsen their offerings too of course ,when they see they can get away with it...

 

edit: seriously, pp gives you a 1000 euro credit within literally seconds, at fair conditions, this will *never* happen with a German bank, they'll always try to rip you off and make you wait for "verification" lol

I'm actually one of those people who thinks that anonymity is overrated. Some people confuse privacy and anonymity and think they go hand in hand, and that protecting privacy means that you need to protect anonymity. I think that's wrong. Anonymity is important if you're a whistle-blower, but if you cannot prove your identity, your crazy rant on some social-media platform shouldn't be visible, and you shouldn't be able to share it or like it.

 

Linus Torvalds 

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21 minutes ago, Kisai said:

Where in those articles does it say they know what people buy? The aclu article mentions several things, but nothing about them knowing your shopping list. Seem odd they'd leave that out?

25 minutes ago, Kisai said:

If that was controlled by the government, they could impose that on you. That's the difference.

why couldn't a private company do that, exactly?

25 minutes ago, Kisai said:

Some right-wing government might decide to impose a prohibition on some moral sin

you mean like the government and private companies both currently do? Thats not a "might".

 

26 minutes ago, Kisai said:

Quite literately you don't want the government to know what you're buying because that turns into a situation where the government is intruding into your personal life. 

wait
are you actually unaware that some things are illegal to purchase and the government currently track and arrest people for those purchases? Because your comments only make sense with the assumption that isn't happening now already.

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2 hours ago, Mark Kaine said:

because itll be a lot more bureaucratic, harder to get, less secure, and probably at worse conditions.

Weird, because that's exactly the opposite of what we're getting here with PIX (basically the same idea). Cheaper and instantaneous transactions. All sellers are trying to move to it, as the money gets available in seconds instead of a month (like with credit cards).

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5 minutes ago, Mark Kaine said:

edit: seriously, pp gives you a 1000 euro credit within literally seconds, at fair conditions, this will *never* happen with a German bank, they'll always try to rip you off and make you wait for "verification" lol

Have you never thought "why is that?" and search for an answer? Or do you prefer to not think and educate yourself, and just make broad assumptions?

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Good. Too much reliance on US banks/credit unions is not good.

Would love if Canada did this as well.

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6 hours ago, Kisai said:

US payment options get a lot of heat for dealing with the adult industry, but relatively no scrutiny when dealing with weapons.

Big difference between the two.

 

8 hours ago, Levent said:

separate US-EU financial institutions

Europe should not rely on US banks. Im from the US and know better than to have centralized anything.

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4 hours ago, poochyena said:

I never understood why the governments never made their own card processing systems like how they print and distribute their own physical money

Norway have a system called BankAxept, so that is basically what is used internally in Norway. When doing anything to non Norwegian stores or whatever, it's still Visa/MasterCard.

Well, technically, BankAxept isn't owned by Norwegian government, but all Norwegian banks.

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