ZKA Pilots Pan-European Debit Card Interoperation

European bank customers will be able to use their debit cards (formerly "ec cards") across international borders at even more acceptance locations within Europe as of 2007 - for the first time this will take place on the basis of the debit card schemes with which cardholders are familiar in their home countries. Thus in the future, customers of German banks and saving institutions will be able to use their debit cards to withdraw cash at ATMs and for POS payments - for example in Italy, Spain and Portugal.

To accomplish this, today the associations of the German banking industry represented in the Zentraler Kreditausschuss (ZKA) signed letters of intent with other European partners regarding the launch of a pilot project for the mutual acceptance of their debit cards and the direct bilateral processing of these transactions. The medium-term objective is the interlinking of the existing national debit card schemes. "With the letters of intent signed today, we have achieved one of the most important milestones in the development of the European card market of the last 15 years", stated Hubert Piel, board member of the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR), which is the lead association this year of Zentraler Kreditausschuss.

Among the initial partners are EUFISERV, a European supplier of processing services for card payments, and SIBS, the operator of the ATM and card payment system “Multibanco” in Portugal, as well as Raiffeisen Landesbank Südtirol and Südtiroler Volksbank as partners in a collaboration with the Italian banking industry. A further letter of intent with EURO6000 will follow in the next few days. All German cards will be accepted at all partner terminals no later than the first quarter of the 2007.

This represents the first step towards interlinking debit card schemes in Europe. The objective is a pan-European system network to be known as the "Euro Alliance of Payment Schemes", which is to be developed within the next two years. For this purpose, the member associations of Zentraler Kreditausschuss, representing the electronic cash and the German ATM system, will conclude a consortium agreement with other partners in Europe that likewise bear responsibility for debit card schemes. Payment system operators from eight European countries are involved in the planning. This project will permanently change the market environment for card-based payment systems in Europe.

For the first time, the Euro Alliance of Payment Schemes will facilitate direct pan-European acceptance of debit cards without the necessity of having an existing international payment system as an intermediary. This will make transaction processing more efficient. At the same time, this will protect the investments made in the past 15 years by the banking and retail industries, and the blanket coverage of the existing systems can be used as a basis for further development.

This gives the banks and savings institutions in Europe an additional option for the processing of debit card payments as a complement to the systems offered by MasterCard and VISA. This new option is based on the success and the business model of today's national debit schemes and will intensify the competition in the European debit card market.

With the harmonisation of the existing regional debit card schemes, the German banking industry and its European partners will complete an important step towards the implementation of a Single European Payments Area (SEPA). National debit card schemes such as electronic cash, pago bancomat or Euro6000 and Multibanco have demonstrated that they can make a valuable contribution to the widespread use of electronic payment methods and that they are altogether more efficient than the existing international payment systems. The interim report of the EU Commission on the sector analysis positively highlighted the efficiency of the national debit card systems as well.

In the coming weeks, Zentraler Kreditausschuss anticipates additional letters of intent as well as contracts on bilateral transaction processing and mutual acceptance of debit cards. For instance in the Netherlands, Interpay, has already declared its willingness to establish the necessary technical basis quickly so that the acceptance of German cards at Dutch ATMs and POS terminals can be implemented as part of the overall plan.