Michiel Willems spoke to Gerard Hartsink, Chairman of the European Payments Council (the coordination and decision-making body of the European banking industry), about the present and the future of the payments market in Europe, banking regulation and harmonisation.
How has the European Payments Council changed since you became Chairman?
The EPC started its work in 2002 as a project organisation of banks out of the EU's then 12 Member States to give a response to the request of the regulators to create the Single Euro Payments Area (SEPA). In 2004, the European Payments Council (EPC) approved its Roadmap 2004-2010 and strengthened its processes and governance. Over time, the number of EU Member States and Euro countries increased - which required an adaptation of EPC governance, about 4,000 banks in the 32 SEPA countries started to deliver Euro payment services based on our rulebooks, affecting more than 360 million people.
And what about card payments?
In the card area, we have made a lot of progress. To make the card processes more efficient and secure, the EPC and other stakeholders created the Book of Requirements with requirements for standards, security and certification.
During my chairmanship, I hope that we will be able to deliver all the relevant rules and standards for electronic payments and mobiel payments. I hope we are able to deliver that in the next five years everyone can pay for goods and services via the internet or with their mobile anywhere in Europe.
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| Gerard Hartsink |
Do you think the EPC is transparent and accountable enough?
The EPC's organisational structure and deliverables are fully transparent to the European payments industry. Stakeholders representing the demand side of the payments market are active in the EPC's Customer Stakeholders Forum and the EPC Cards Stakeholders Group. The EPC also provides detailed and easily accessible communication material explaining the SEPA objectives and the EPC deliverables.
How independent is your organisation?
Self-regulatory efforts by the European banking industry cooperating in the EPC are exclusively aimed at defining the business rules and standards governing SEPA schemes and frameworks, and to engage the banking industry in the process of implementing these schemes and standards. As a result of self-regulation by banks only, payment service providers represent almost 100% of European payment volumes today. We also took the necessary steps to alert all banks in the Euro area of their obligation to be reachable for cross-border direct debits. These figures demonstrate that self-regulation produced precisely and successfully the tangible results requested by the political drivers of the SEPA initiative.
Do you believe in self-regulation by banks?
Self-regulation by banks is neither intended nor designed to impose migration to SEPA payment instruments on the demand side. The EPC is responsible for the development of such schemes and frameworks but not for the overall management of the this process. The national SEPA committees in the 17 euro countries have the responsibility for implementation.The process of developing payment schemes should continue to rely on the proven model of self-regulation by the banking industry.
What do you think will be the leading payment method in the future? Mobile payments, voice identification, payments with ID cards to name a few...
The evolution of payment methods has shown structural differences in different countries if one analyses the statistics included in the European Central Bank's 'Blue Book'. The buyers of goods and services decide which instruments they use - equally, merchants choose which instruments they prefer and accept. Mobile technology has a lot of potential as an authentication tool for initiating payments. Options using voice identification are technically possible but I do not see that merchants, public transport companies or banks are prepared to invest in these options for initiating a payment.
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| Hartsink |
Do you believe in the value and growing importance of virtual currencies and digital money?
Virtual currencies and electronic money are not on our agenda. We acknowledge that they are a reality today for some specific and closed environments. However, virtual currency solutions are complex and expensive to manage. The traditional functions associated with classic currencies do not apply to e-currencies - such as the storage function, for example. Consumers are not easily able to use that money for other purposes outside the closed network of participants.
Do you think fraud and cybercrime are serious threats?How should they be tackled?
Banks have the experience that certain people bribe the systems created for paying for goods and services. Central banks monitor the security of payment systems and take action when required. We are very aware of these issues, and have created several policies to prevent fraud and cybercrime. We do not publish all our security policies. But we agreed in 2006 to implement, before the end of 2010, the PIN and Chip standards on cards, and ATM terminals to prevent skimming fraud.
What do you think about other currency and banking harmonisation systems, like the proposal for a 'SEPA-type' framework in Southern Africa?
We are aware that our rulebooks, guidelines and fFrameworks are used as a benchmark in other jurisdictions in the world. When requested, we make our documentation available. For example, our ideas were used for creating the International Payments Framework that is focused on non-urgent cross-border credit transfer payments in any currency.
Thank you for your time.
Michiel Willems © 2011-2012 CP Publishing Ltd. London, UK. Pictures: European Payments Council
