7 March 2019
New Proxy Lookup Service - ideal foundation for a pan-European payment ecosystem
According to the ECB, Europe must once again become a strong competitor in the battle for global payments solutions, so that our continent is no longer depending on non-European systems such as PayPal. In the search for pan-European payment brands, European countries should stop developing payment services that are only aimed on the national market, is the opinion of Yves Mersch, member of the Executive Board of the European Central Bank (ECB). Nevertheless, we now see that most European countries offer their own payment solutions.
This fragmentation does not contribute to the quest for pan-European payment solutions because customers have to use different apps and tools in different European countries for their payments. A complex situation that leads to the adoption of non-European payment brands which can be used throughout Europe. Paypal is an example of this, but non-European bigtechs also want to create cross-border payment solutions.
In order to stay ahead of the bigtechs and take control again, European payment brands must give customers the opportunity to pay with the same solutions across Europe. That is why we have to bundle our European activities with the goal of mainly improving the end-user experience. In other words, fragmentation of the payment market must be stopped. With this statement in mind, the new SEPA Proxy Lookup Service (SPL) has been developed and launched. The first provider has already integrated the service.
Across borders and communities
The SEPA Proxy Lookup (SPL) service makes it considerably easier for end users to make mobile person-to-person (P2P) payments securely and highly comfortable across borders and communities. Customers can use their mobile device to transfer money from their bank account to another individual’s account across Europe without manually exchanging payment information, such as IBAN. This method makes the payment process much easier, safer and less error-prone.
The SPL service is an intelligent European routing network among the connected P2P payment providers, which abstains from creating a central IBAN database. It complies with legislation concerning the security and protection of personal data and contributes to the creation of a user-friendly pan-European payment ecosystem, one in which cross-border payments are just as smooth as the existing domestic payments.
It’s not surprising that the European Payments Council (EPC) created and manages the SPL scheme, as this solution builds interoperable European (mobile) P2P payment solutions. Two years ago the ECP set up a task force to create interoperability between existing P2P payment services through a new service, the SEPA Proxy Lookup (SPL). After launching a Request for Proposal (RFP), the task force selected equensWorldline as its preferred service provider for this SPL service after a detailed analysis of received RFP responses.
The EPC also created and manages the SPL Scheme rulebook that contains a set of rules, practices and standards in order to operate, join and participate in the scheme.
The EPC, like equensWorldline and the ECB, recognises the importance of user-friendly pan-European payment solutions. Not only because they improve ease of use in a European payments market known for its fragmentation, but also because they strengthen the competitive position of our continent. Now that the bigtechs from the United States (Google, Amazon, Apple) and China (Tencent, AliPay) are entering the payment market, the fact that Europe is lagging behind in terms of scale has become more pressing.
As said before, these developments reveal the increasing importance of a pan-European payment ecosystem that is independent of non-European payment solutions. European countries tend to focus on their national solutions, which presents a significant challenge. Michael Corbat, CEO of the American Citigroup, stated at Davos that politicians unintentionally maintain fragmentation through national pride or by pursuing their country’s market domination.
Therefore the key to success is the ability to connect different schemes, not only between countries but also between the different communities within countries. The advantage of connecting schemes is that we solve the problem of payment world fragmentation without creating a whole new structure for everyone with huge implementation effort. This already happens in the telecom world. Here we can use roaming to make calls and surf the internet on our phones when we’re in other countries.
Fortunately, we’re now seeing the birth of the first building blocks that can lead to important pan-European interoperable solutions that don’t need major changes to the existing domestic solutions. The SPL service is easy to implement, and end users may rapidly adapt to changes due to the ease of use. By improving the user experience for credit transfers, the SEPA proxy lookup service will play an important role in the success of new Payment Initiation Services (PIS) based on PSD2, as well as person-to-person Instant Payments. This makes the SPL service the ideal foundation for a pan-European payment ecosystem.