Cross-border payments in the EU

The report describes the account-to-account payments technology, the current and needed infrastructure and the regulatory opportunities while also describing the current national actors and the possibilities for further collaboration across borders, which could function as an enabler for further expansion of already existing infrastructure towards the entire single market.

Most e-commerce purchases are carried out using traditional card payments, which require a comprehensive payment infrastructure to ensure safe, fast and reliable in-person payments. When purchasing online, this comprehensive payment infrastructure designed for physical transactions is not strictly necessary. Instead, payment providers can make use of the more lean and direct account-to-account payment rails.

This leaner technology can reduce costs and increase user-friendliness while maintaining the high levels of security of traditional card scheme infrastructure. The report shows that the average transaction cost for an online purchase using the traditional card payment infrastructure amounts to EUR 0.9-0.7, while the cost of an account-to-account transaction is typically around EUR 0.5.

Switching from card-based payments to account-to-account payments for online transactions in the EU (both in-country and cross-border) can potentially reduce social costs by EUR 1.4 billion annually, corresponding to a 21% saving in total costs. If the switch were to happen for Person-to-Business (P2B) in-store transactions, the saving potential could be as much as EUR 70 billion annually, corresponding to a 35% cost saving.

Stakeholders representing different parts of the existing payment system point to seven initiatives that can improve the digital infrastructure for account-to-account payments and create better conditions for the development of easy, fast, reliable and low-cost cross-border payments in the EU:

1. Improve conditions for account-to-account payments.
2. Ensure further adoption of existing technologies and infrastructure.
3. Make fees in payment processing more transparent.
4. Adopt the digital euro in a smooth and harmonised way.
5. Leverage the development of eIDAS in SCA.
6. Design regulations to harmonise and standardise APIs.
7. Increase wallet competition.

In an era of increasing geopolitical tensions, re-evaluation of global value chains and a global economy heading towards recession, the Single Market is key to securing growth, competitiveness and resilience of the EU economy.

See all the Implement Consulting Group studies commissioned by Amazon