Countries in Europe should work for independent and sovereign National card schemes
Establishing a super agency for controlling banks and financial institutions in Europe may not be necessary and could potentially introduce excessive bureaucracy.
David Stephenson, General Secretary, European Card Payment Association (ECPA)
David Stephenson has over 30 years’ experience in the payment card industry in a variety of senior international marketing roles, including the introduction of chipcard technology and payments systems in China when working with the smartcard card manufacturer Bull CP8. During his time with the French payment system Cartes Bancaires, he was responsible for the relations with all the major international card schemes as well as lobbying activities with European institutions including the European Commission, Parliament, and Central Bank. He is currently General Secretary of the European Card Payment Association (ECPA). We are talking about the digital payment agenda in Europe and the role of Bulgaria, about the National card and payment scheme and how important it is for countries to protect their national card schemes. He shares his opinion about the new European legislation for Anti-money Laundering Agency and PSD2, about the big plans for adopting a digital euro.
He was a keynote speaker at the international conferenceShaping the future of payments in Europeorganized by BORICA AD and National card and payment scheme.
Mr. Stephenson, where is Bulgaria on the payments map in Europe? What is our footprint in digital payments in Europe?
What is clear for the market in Bulgaria is that for a noticeably short period of time instant payments in Bulgaria has grown very quickly. The National Card and Payment Scheme is progressing very quickly, becoming a recognized player in the European Union.
At what stage are we according to regulations and requirements about payments?
If we return to the first question, the size of the French Card Scheme Cartes Bancaires, which is the largest scheme in the European Union, is approximately 80 million cards in use, with a transaction value of around 15 billion euros. This demonstrates the importance of the National card scheme for the French customers. The Bulgarian National card and payment scheme is progressing rapidly, and is now recognized as one of the key European schemes.
Where do we stand in terms of regulation? I used the example of the French scheme because it has multiple facets, requiring the separation of processing from the scheme and complying with interchange rules under European Union regulations. We know that BORICA separates the card scheme from the processor and complies with European Union regulations. In most European countries, the national schemes are not public companies and are generally simply acknowledged and supervised by the Central bank. In contrast, in China, for example, Government intervention in the national card scheme is more noticeable.
What is your experience in China, how they do payments? What kind of regulations do they have and how do people there pay digitally? What is your experience in France?
China has a highly open market for Chinese organizations, with the majority of digital payment methods being widely used. Among the Chinese population, especially the younger generation, digital payments are the norm. With over 1.5 billion people in China the majority are using digital payments, it has become practically ubiquitous.
In France, which is the largest European market for card payments, Groupement des Cartes Bancaires (CB), supervised by the Banque de France, has developed the widely used the four-corner system and has developed the scheme rules. This system involves the bank of the cardholder, the bank of the merchant that processes the transactions, the merchant, and the cardholder. Each scheme regulates all four corners of the system. From the youngest to the oldest cardholder in France, there is a strong attachment to their CB card, and there is only a gradual shift towards instant payments.
What is the difference for the customer between card payments and instant payments?
Card payments provide merchants with the guarantee that the transaction will be honored. On the other hand, instant payments refer to the speed at which the funds are transferred to the client. Instant payments can utilize the existing infrastructure of cards, ensuring quick processing. This makes it an excellent solution for businesses and industries of all kinds.
You are the General Secretary of The European Card Payment Association. What is the most important agenda for the Association?
The most important topic is to accompany the members, which are all card schemes, so that they remain independent, sovereign in their own countries.
Is the digital euro a hot topic for the Association?
I believe that digital currency will eventually become a reality, but at the moment, it’s uncertain if there is a pressing need for it. We are actively working on it and closely observing the situation. While it is inevitable, the timing is uncertain, and currently, it is not a top priority for everyone.
New Anti-money Laundering Agency (AMLA) that will conduct additional controls on national banks and financial institutions, I would like to know your opinion?
The objectives of anti-money laundering measures are indeed necessary, and everyone is committed to meeting them. Each individual card scheme has its own processes in place to combat fraud, ensure customer identification, and comply with anti-money laundering procedures. Establishing a super agency for controlling these measures in Europe may not be necessary and could potentially introduce excessive bureaucracy.
Would you, please, tell us more about the Soverability project? Is it only a pipedream or it could become reality?
One word which I used frequently during today’s conference is Sovereignty. Recent events in Ukraine and elsewhere have highlighted the increasing importance of payments from a geopolitical perspective, This is further magnified against the backdrop that payments in Europe are dominated by only a handful of non-European players and card transactions are often processed outside of Europe. This gives rise to the risk that the processing and storage of cardholder and other data may not fully comply with European regulations regarding data protection and confidentiality, to the detriment of the European Citizen and Retailers. It is also generally recognized that intra-European card transactions are more expensive when acquired via an International Card Scheme compared with a domestic / national scheme. The European Central Bank and the European Commission have consistently underlined the importance of the need for a truly European payments solution, not only in terms of an efficient single market, but also implying the need for European sovereignty in this area. The European Payments Initiative (EPI) was launched in 2020 to bring together a coalition of market participants to build a truly European solution for a variety of European means of payment. Although card transactions were initially part of the EPI initiative, this is no longer the case, and if the European national card schemes are to avoid being orphaned in a dynamic European payments market, then a viable alternative is needed to preserve European sovereignty.
Is it a pipedream or could it become a reality? Only time will tell.
The interview is published in 3eNews