Interview with Mr. Peter Blasche, Chairman of EAPS (Euro Alliance of Payment Schemes)
Currently, there is at least one national card scheme operating in each euro area country. To allow cross-border payments, national cards are often "co-branded" with Visa or MasterCard. The SEPA Cards Framework (SCF), adopted by the EPC (European Payments Council) in 2006, aims to enhance levels of interoperability within SEPA and create conditions which would deliver wider card acceptance for consumers in Europe.
With the SCF, the European authorities encourage the emergence of a new European card scheme to compete with the international card schemes duopoly. To better understand the challenges and stakes linked to the card market evolutions, Sia Partners interviewed Peter Blasche, Chairman of EAPS, one of the ongoing initiatives to create a pan-european card scheme.
Sia : Could you briefly introduce EAPS to our readers? Why such an initiative?
M. Blasche : EAPS is an international alliance of European interbank card payment networks with the aim of creating a pan-European debit card system. In our structure of partners we have the Brussels based EUFISERV which is a European ATM network, MULTIBANCO in Portugal, EURO 6000 in Spain , girocard in Germany and Consorzio BANCOMAT in Italy which are both active in EAPS with their cards, POS terminals and ATM networks and LINK which is UK ATM network.
M. Blasche : A key factor of EAPS is that it is governed by European players (issuers and acquirers) who focus on European issues, such as SEPA compliance. So the main goal is to connect European debit card schemes to provide a European alternative to the global card schemes. One advantage of EAPS is that it is built on existing payment infrastructures. By using what is already in place we are able to keep the costs down and to benefit from an increased market reach and card acceptance.
Another crucial component is that EAPS enables its participants to select their preferred processors which is in line with the EU regulators' interest of separating scheme from processing. Additionally, EAPS is organised as a not for profit organization with the main objective to bring benefits to its participants. Therefore EAPS can operate with very low scheme fees and no cost for brand usage.
Sia : Could you present your role within EAPS and your professional background?
M. Blasche : Since October 2010, I am Chairman of the Board of Directors of the Euro Alliance of Payment Schemes, succeeding Ugo Bechis who led EAPS from beginning of 2008 until summer 2010. I am also Head of Payments and Card Schemes at the Association of the public sector Banks (VÖB), where I am managing with the German Banking Sector (ZKA) the girocard debit card scheme, originally known as electronic cash. Another focus of my activities is presently the implementation of SEPA at German and European level. After studying computer science, I have worked in different jobs at Citibank, Postbank and the VöB-ZVD Bank.
Sia : If we take a look at the current European market of cards, what are the ongoing/upcoming evolutions linked to SEPA Cards Framework?
M. Blasche : Obviously most business still happens locally and it is very complex to find rules that can be integrated globally if you take into account the different "payment cultures" in the world. National schemes' decision to open up and connect can be accredited mostly to the announcements of European policymakers.
As a consequence the SCF was issued and people started thinking about solutions on how to build a European scheme and a European brand. The card usage was indeed already well spread due to global card schemes but it was not very cost efficient for issuers and acquirers. So EAPS is on a good way to find more efficient solutions without making huge investments in marketing and infrastructures by using the networks of existing European schemes.
M. Blasche : I think we will see an increase in the use of cards. In Europe consumers are generally satisfied with their debit cards. It took the card holders a relatively long time to accommodate with the card usage. To raise transaction numbers further, the payment industry will continue the dialogue with the consumers by informing about the benefits. Obviously with cards, mainly credit cards, being used more frequently on the internet, fraud stays an important issue to deal with. The more the Europeans can use their local card scheme and the secure chip and pin infrastructure the more comfortable the customers should feel using their cards. Convenience and comfort are the main issues for further growth and in both regards the payments industry has already achieved quite a lot.
Sia : What is the current status of EAPS and the development objectives in the coming years?
M. Blasche : To implement more services between our partners is the top priority right now. Our EAPS partners are currently finalising the implementation of additional functionalities.
M. Blasche : In a second step we will be looking to have more partners, schemes and acquirers as already possible. This means that organisation can join, even if they do not belong to a local scheme. Our first priority is to continue growth in Europe and maintain the European governance. Of course, in the future corporations with other schemes could be considered. But the focus stays on Europe at the moment. As you may know, about 98% of transactions of issuers in a given European country are domestic and only 2% are cross-border transactions. The vast majority of those cross-border transactions take place within Europe. Consequently EAPS focuses on the European markets.
Sia : How do you position EAPS compared to international schemes?
M. Blasche : Within the last three years, EAPS made considerable progress connecting local European card schemes. In 2010 EAPS had about 2 million transactions which is already a significant number of the cross-border volumes from the involved partners. We expect the number to increase further in 2011 due to more implementations already scheduled.
Secondly, we don't mandate a central processing but we have an open infrastructure allowing more competition.
Sia : Do you think that domestic schemes will still exist in the future if pan-European SCF compliant schemes emerge?
M. Blasche : Today, local European schemes fulfil the needs of the local markets better than anyone else. All of the local schemes have detailed expertise in their markets, such as mobile top-up solutions, paying parking tickets or convenience bills on an ATM, etc. Due to the nature of global schemes, they focus more on what is common in different markets.
Sia : Since the competition between actors will be increased thanks to the SCF, what are according to you the determinant factors to succeed in the future?
M. Blasche : I believe that the SCF and the demands of the European regulators for an open processing infrastructure will be a determinant factor. The separation of scheme management and processing services will increase the competition. EAPS appreciates the work from European groups on open standards in this field. The Berlin Group specifications, a common set of standards for the interface between the acquirer host and the issuer host, are already implemented from gateways that process EAPS transactions - and it works very well.