What the Closing of Paydirekt Means for EPI

Paydirekt, the German initiative launched in 2015 as Europe’s answer to PayPal, is shutting down. The project has been overtaken by the European Payments Initiative (EPI), formed four years ago to combat the encroaching dominance of American-based payment rivals like Visa and Apple Pay. The move marks another step toward EPI establishing itself as the dominant European online payment system.

EPI has announced that its goal is to build a unified payment system to be used across Europe. Its key offering, a digital wallet, is currently being rolled out to support account-to-account instant P2P and consumer-to-business payments, as well as online, mobile, and point-of-sale payments in the near future.

The group’s initial intent was to challenge U.S. giants Mastercard and Visa in Europe as a card issuer, but the immediate victims seem to be its Euro-based rivals. Paydirekt was launched by a consortium of major German banks as a way for online shoppers to pay directly from their bank accounts. But its service, branded as Giropay, never really caught on. According to data from EHI Retail Institute, Giropay commanded just 1.2% of all online payments even within Germany.

High Hopes

EPI launched in July 2020 with the backing of 16 major European banks, eventually growing to include 31 major banks, as well as third-party acquirers Worldline and Nets, who became shareholders in the EPI Interim Company. Its stated ambition was to create “a truly European digital payment solution, carefully designed for the business needs of the 21st century,” as Gilles Grapinet, Chairman and CEO of Worldline, noted.

However, the consortium faced challenges and may have been too ambitious. In March 2022, 20 banks pulled out of EPI, forcing the organization to shift its plans from challenging Visa and Mastercard with a card of its own to focusing on developing its digital wallet, to be called Wero.

Wero will soon be available to consumers in Belgium, France, and Germany, and is scheduled to be introduced in the Netherlands and other European nations in the coming years. The shutdown of Paydirekt suggests that its rivals expect Wero and EPI to succeed in these efforts. EPI has regained its footing and is poised to become the dominant player in this category for the foreseeable future.