European banks and credit card processors are working to establish a new pan-European payment network to challenge the dominance of the US payments companies Mastercard and Visa and head off the threat from technology giants such as PayPal, Google and Apple. The Brussels-based project, called the European Payments Initiative, began in July and is expected to go to market in the EU next year. Thus far, it has received funding of more than $36 million from sponsors. Its backers include 31 European banks and credit institutions such as Deutsche Bank, UniCredit, BNP Paribas, ING, Societe Generale, Santander and Sabadell. It also has the backing of the European Commission as well as various financial regulators in the bloc. <em>The National</em> looks at the project and finds out what it means for the digital payments ecosystem in the EU. The <a href="https://www.epicompany.eu/">EPI</a> aims to introduce an end-to-end payment system based on an instant transaction model. It will offer a card to customers, which allows them to carry out in-store, online, cash withdrawal, digital wallet and merchant payments, as well as peer-to-peer transactions. “The solution aims to become a new standard in payments … as an alternative to existing international payment solutions and schemes,” the EPI said on its website. “This initiative is in line with recent positions from European public authorities urging banks and payment service providers to build a payment solution on top of the instant payment scheme and to offer an alternative and independent payment system.” Thirty-one banks spanning across seven countries and two pan-European third-party acquirers – Worldline and Nets – are currently part of the project. The initiative is open to more European banks, financial institutions and payment service providers who wish to join. Organisations can apply and join the EPI during the next window by the end of this year. "Almost 20 years after the introduction of the euro, the moment has come to join forces in a collective effort to provide consumers and merchants with a truly European digital payment solution,"<em> </em>Gilles Grapinet, chairman and chief executive of France-based Worldline, said. There have already been previous attempts to challenge the dominance of US companies in this space, such as the Monnet Project encompassing 24 European lenders that launched in 2011, but these were not successful. However, the EPI has the EU’s backing. Its ambition is to provide a new standard of payments in Europe, offering an independent European alternative to the two major US payment companies. By joining this initiative, European issuers and acquirers are supporting the strengthening of the single market and the European digital agenda, Joachim Schmalzl, the chairman of the EPI board, said. “Our aim is to stimulate the growth of a unified Europe by continuously innovating in payments, which is an important underlying feature of our economy,” he added. The EPI will provide a payments regime “corresponding to European needs and covering the diversity of our European markets on the consumer and merchant side”, Martina Weimert, chief executive of EPI, said. The total transaction value of digital payments in Europe is projected to reach $1.17 trillion this year, according to <a href="https://www.statista.com/outlook/dmo/fintech/digital-payments/europe">Statista</a>. It is growing at an annual rate of 13.4 per cent and is expected to increase to $1.95tn by 2025. Currently, nearly 80 per cent of transactions in Europe are handled by Mastercard and Visa, according to EuroCommerce, a group of nearly 6 million retail, wholesale and other trading companies. The EPI is expected to provide a blueprint for a pan-European payments service by September, according to the <em>Financial Times</em>. "The first real-world applications – a system for electronic real-time payments between consumers – could be launched in early 2022, while a broader payments tool could follow in the second half of next year," Mr Schmalzl told the <em>FT</em>.