The European Financial Marketing Association (EFMA) and IT company CSC have launched a jointly authored report, ‘The European Payments Barometer’, examining trends in payments across the European region.
The report focuses on the impact of the EU’s single euro payments area (SEPA) initiative and Payment Services Directive (PSD) legislation, which will create a single payments area across the EU, and it found clear differences between the approach of banks and their business clients towards the coming changes.
- Overall bank revenues are likely to remain stable or rise, because of new revenues from added value services the banks expect to launch. However, costs to customers should come down for basic banking transactions, as increased competition pushes down prices for these services.
- Revenue from increasingly automated international payment transactions will also fall.
- Operationally, while banks are seeing an impact from SEPA and PSD, their clients do not. Only a small portion of businesses seems to recognise the extent of the coming transformation of the European payments market and the investments that will be necessary.
Michael Arben, head of strategic initiatives for CSC’s Financial Services Group in Europe, Middle East and Africa (EMEA), said: “The majority of companies – as opposed to banks – have adopted a wait-and-see attitude, with only one-third of respondents committed to taking the new European payments area into account. Companies are apparently waiting for the banks to make the transfer easier, and seem prepared to accept that this will bring additional cost to them.”
SEPA/PSD is generating structural change within the European banking community, as the breakdown of borders bring new competitors into play.
Arben added: “Harmonisation of European banking laws will inevitably bring change. Banks are nervous about the arrival of new competitors in their markets. Close to half the European banks expect strong competition from payment institutions and anticipate the market share of international card schemes, in particular, will grow. Most believe this will intensify price-based competition between the banks.”
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