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Closing remarks for the conference “The future of retail payments: opportunities and challenges”

Speech by Gertrude Tumpel-Gugerell, Member of the Executive Board of the ECB,Vienna, 13 May 2011

Ladies and Gentlemen,

After two very intensive and extremely interesting days of presentations and discussions on the opportunities and challenges in retail payments, it is my utmost pleasure being able to conclude this conference together with Vice Governor Duchatczek.

Let me recall on the objective of this two days conference

  • Firstly, to put retail payments in the middle of a debate between central bankers, market participants, regulators and academics.

  • Secondly, to discuss the opportunities and challenges ahead of us in retail payments.

Although we heard in the sessions on payments behaviour that cash still plays an important role in day-to-day payments, the main focus of this conference was of course on electronic payments. Non-cash retail payments have witnessed increased popularity in Europe and other regions over the past decades and will continue to do so. For example, on average, volumes of cashless payments in the euro are have increased by 6 percent per year. In the euro area card payments experienced the highest growth by about 10 percent and have become the most used non-cash payment instrument, with over 19 billion payments in 2009 for the euro area.

In this context, we take the ever increasing memory and processing capacity of our computer equipment for granted – something technicians often describe as "Moore's law", named after Intel co-founder Gordon E. Moore.

In fact it was yesterday, exactly 70 years ago, when the world’s first workable computer, called Z3, was introduced in Berlin by Konrad Zuse. Despite being destroyed in the chaos of war, this date marks the foundation of something we today take for granted. And even 30 years ago, when the first Personal Computer of IBM was introduced, nobody expected the change in all of our lives it would entail. This ongoing technical progress has already changed the way we pay and will even more substantially do in future. The keynote speech of David Evans this afternoon as well as the outstanding panel we just listened too, gave an impression how this development might look like.

Similar to the amenities of technological developments, we got used to the advantages the European integration has brought with it very quickly. Sometimes we take these achievements even for granted. However, 15 years ago, we had no euro and only 10 years ago euro banknotes and coins were introduced.

When it was first launched in 1999 and then when the euro cash changeover took place in 2002, the euro was met with a certain degree of criticism and scepticism. Today, the euro is the single currency for 17 countries, with a total population of 330 million citizens. The euro has proved to be a resounding success.

These days in 2002, the European banking industry laid the foundation of the Single Euro Payments Area, by publishing the White Paper “Euroland: Our Single Payment Area!” In addition to the banks, many stakeholders want to bring the SEPA project further and have contributed to its progress so far.

First, remarkable progress has been made by the payments industry in delivering SEPA, by agreeing on common schemes for credit transfers and direct debits, to be used throughout Europe.

Second, I believe that we should not forget the role public authorities are playing to get SEPA up and running. They are typically representing a major share of a country’s overall payments volume and in a number of countries we see great progress by public administrations moving to SEPA standards. Currently the European Parliament and the Council are discussing the European Commission’s proposal for an end date to SEPA migration. In my view these discussions are progressing well, not at least because of the commitment of the Hungarian Presidency. Another aspect in which public authorities have been very active in the last year has been in the establishment of the SEPA Council. We, the ECB, and the European Commission recognised that having both the demand and the supply side around the same table discussing SEPA related issues in a transparent way is crucial for the success of the project.

Of course it is impossible to summarize these two days of conference in a few minutes. In fact the conference documentation is provided online and we have already informed all registered participants about the respective link. Moreover we will publish a summary with the key findings of the conference in due course. At this point I would only like to mention some “headlines” which I took away from the two days full of extremely interesting presentations and discussions:

  • During our conference it has been widely acknowledged that retail payments are a cornerstone of retail banking and the banks’ business case.

  • As the financial crisis has shown, Europe has benefited from the level of integration and innovation achieved so far. However, there is still considerable room for more of the same.

  • Retail payment integration is not on the harmonisation of payments behaviour, but on the harmonisation of instruments, standards, rules and systems. Payments behaviour differs considerably across cultures and countries. In fact we can still observe a strong persistence of payment habits. Moreover, there is country evidence that the cost of cash can be substantial and there is room for efficiency gains.

  • Even if financial stability is not directly affected, fraud in retail payments could have societal impact and effects on the use of different payment instruments.

  • Although customers have obvious benefits of an integrated retail payments market, their readiness for change is not to be taken for granted. However, as we have learned yesterday, especially companies doing cross border, are in favour of SEPA and even ask for a migration end date.

  • The role of central banks in offering large value payment systems is generally accepted In contrast to that, the future of retail payment processing in an integrated market and the operational involvement of central banks in it is still intensively discussed.

  • Innovation in retail payments will not only make our everyday lives more convenient by offering easier access to payment instruments, it might also be a chance to further close the gap between unbanked and banked population. Innovation might be a tool to increase financial inclusion.

According to my assessment, the contributions in the past two days have by far excelled the expectations and ensured that the objectives for this conference have been clearly met.

I would like to thank our co-organizers, the Oesterreichische Nationalbank, for hosting this event in Vienna and their excellent organisation, all of us have experienced the past two days.

With this in mind I would like to sincerely thank all the speakers and participants of this conference for their essential contribution to the success of this event and I hope that this conference will contribute that we succeed in mastering the challenges in retails payments and to seize the opportunities as well.

For me personally this has been the last retail payments conference I have hosted as ECB Board Member. These have been eight challenging years, in which the integration of the European retail payments market was always one of the top priorities of my agenda. Although a lot have been achieved, the realisation of a fully fledged Single Euro Payments Area will still take one or the other year. However, knowing the stakeholders involved in this project – a lot of them are here today – I am convinced that SEPA is in good hands.


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