In the world of European payments, any new development is never that far from what has gone before. Ground breaking technology inspires new working methodologies. Visionary leaders effect unique market dynamics.
Wero: leveraging early initiatives for success
But when something new is afoot, as with life itself, it can be enlightening to dig a little into the history to understand the drivers of change and the ingredients for success.
The European Payments Initiative (EPI) was brought forward over the last few years to provide a European-owned cross-border payments system encompassing retail – both physical and online, and Account-to-Account (A2A) payments through a card and a state-of-the-art wallet offering, Wero.
Eighteen founding banking members from five European countries came together mid-2020, including acquirers Worldline and Nets to take care of acceptance.
The ambitious project bears the hallmarks of the merger of Eurocheque and Eurocard, which became Europay (ultimately subsumed by Mastercard) in 1992.
Eurocheque was a Europe-wide cheque introduced in 1969 as a cash alternative (initially for travellers crossing currency borders pre-SEPA) and Eurocard a European charge card introduced to compete with Amex in 1964.
Speaking to prominent and influential parties to the project at the time, we ask: Which of Europay’s success factors could be duly applied to EPI to see it to a faster conclusion?
Eyes on Europe late 80s, early 90s – a rich payments tapestry not so ripe for credit
Mastercard and Visa were dominant players at the time, and Mastercard especially was drawn to Europe to expand its credit card footprint.
Richard Rolfe, as Editor of American publication Credit Card Management and future founder of the European Card Review magazine (which became Payments, Cards & Mobile), was charged with the task of scoping out the market and appetite for credit cards across Europe.
“Mastercard in particular was convinced there was scope to drive US-style credit cards in mainland Europe – as were key vendors like First Data – but it was soon obvious that the European banking community preferred to stick with their charge cards,” he said.
Still, ATM/debit cards were the first choice of nearly all the banks. Europay was established in response to develop a European brand for the European market, with a strong focus on debit.
There was also a “tension” between the UK – which had a very different relationship with Visa and Mastercard, and a different attitude towards credit cards – and other major European countries. Nothing new there.
All of this had to be overcome and is not dissimilar to the challenges of EPI in bridging many facets of a complex system – the operative function being to convince the stakeholders.
Says Rolfe, “The Americans and to a lesser extent, the UK banks had a very relaxed attitude to bad debts and took the view that 5%/6% losses on their books were acceptable – just the cost of doing business. The Continentals, on the other hand, were horrified by this attitude.”
As he highlights, the German word for debt is ‘schuld’ (as it is also in Dutch) and it is the same word as guilt. You get the picture.
Bridging the gap
Creating a united front to build an identity brand meant understanding national attitudes towards credit and debit, as well as making a business case.
The greatest challenge, even for Europay, lay in convincing its national schemes to buy into a shared system albeit with the overarching objective of buying into and building a European identity.
These national schemes in France, Spain, Germany, Holland, etc. functioned very well for their purposes, and the incentive to build a major European brand was simply not as strong as the fear of being cannibalised by a harmonised scheme.
Etienne Goosse, EPI board member and international payments executive who was also at the heart of the Europay initiative on the Management Committee, remembers “reticence and resistance” from the national networks, and “efforts on the part of some strong national debit card schemes to align to be a counter force”.
Ultimately, one by one, through talks and careful diplomacy, they came around under the shared European identity.
Dirk La Meir, a Vice-President of Eurocard International prior to its merger with Eurocheque, and later the first President of OpenWay, was born in Belgium, lived in Portugal for many years, and developed an extensive business network across the continent.
His deep understanding of Europe’s diverse regional nuances made him instrumental in persuading the fragmented banking community to unite under the Europay initiative.
Dirk also played a pivotal role in fostering consumer loyalty towards the new payment system.
His strategic foresight led to Europay’s sponsorship of major sporting events, such as the Euro 2000 football competition, where participating banks could issue cards branded with the tournament logo, further strengthening the Europay brand.
What were other elements of Europay’s ultimate success that resonate today?
The European Commission wanted to encourage retail banking across borders. And technology-wise, the rails for the time were slick and sophisticated and formed a substantial part of the rails today.
“It was a very, very clever, very advanced piece of network. Built by British company Logica in the early 80s, it became EPInet, and was the first peer-to-peer network based on IBM series with nodes enabling communication between the different countries and interfacing with the Mastercard international network as well,” Jones said.
“It was good European stuff with an American brand,” as Peter Jones, chairman, PSE Consulting put it. Jones was close to the Europay Debit initiative at the time. Europay ultimately wanted a European brand on the European rails.
One of the strongest advocates of maximizing the reuse of existing infrastructure and investing in its flexibility and integrability was Dirk La Meir. After leaving Eurocard, he continued to promote the same at OpenWay, and this vision proved to be highly strategic in the long run.
OpenWay’s card payments software platform eventually became the crucial link between international card networks and Eurasia’s first CBDC cards, while in Asia it allowed to leverage card rails to build a wallet ecosystem connecting 40 million consumers and 702,000 SMEs.
The concept of leveraging existing rails instead of building new ones from scratch is embraced by EPI today, as demonstrated by its acquisition of PayConiq and iDEAL.
Speaking in tongues or overcoming language barriers?
While EPI’s main challenges today are investment due to a vastly different and heavily regulated fee structure, and the sheer complexity of the infrastructure nowadays, the long-term lesson from Europay would seem to apply.
Rolfe, Jones and Goosse all speak to advocacy, and the personal touch in the art of diplomacy.
Whatever about invisible payments and instant transactions, seamlessly traversing borders, or even bare-faced greed and patriotism, as Etienne Goosse remembers, it really came down to perseverance and diplomacy.
“I think history is repeating itself and the same success factors are the ones that will make some initiatives succeed or not. You need the vision, you need the people, you need the plan, you need the energy. All the ingredients were there but it wasn’t a given that it would work.”
Goosse speaks of a “key moment” during a meeting with a major French bank to overcome a veto on the Eurocheque side which was blocking the whole endeavour.
He stresses the time it took. Lengthy talks delicately broaching the thorny issues around change, control, and the balancing of interests therein.
But this meeting was a breakthrough and epitomised true progress. A pivotal moment whereby culture came into its own – bridging disparate banking cultures with a common language that spoke to the incumbents in more ways than two.
Goosse underplays the fact that speaking in French helped bring that crucial mission over the line.
A common language can be applied to all aspects of these kinds of endeavours: the language of technology, economics, being on the same page in terms of payments standards; and the language of simple human communication that inspires, that convinces, that celebrates, that articulates, that resonates.
Fluent in Dutch, French, English, German, Spanish, and Portuguese, and skilled in the language of technology, Dirk La Meir also had a talent for visual communication.
He designed Eurocard’s first logo, in which the central red element resembled both a human tongue and the flame of the Olympic torch, evoking unity and togetherness.
This symbolism still resonates in today’s European payments initiatives. One of truly inspiring things about EPI’s Wero project is that the wallet brand begins with “WE”.
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