Guenther Gall Executive Vice President, joined GZB – former name of RZB – and maintained several management functions in the payments area. He is currently Division Head of Transaction Services (product+profit responsibility for cash management , custody, cards and infrastructure). Nationally, he is member of the supervisory board of STUZZA (Society of Payment Systems Research and Cooperation) as well as as the supervisory board of EPA (Europay Austria), the Austrian card company for Mastercard and Maestro and deputy chairman of the supervisory board of A Trust, the Austrian certification authority for digital signatures. Internationally, he is board director at SWIFT, member of the EPC (European Payment Council) Plenary and board member of the EBA Association. Mr. Gall was the chairman and speaker of the 2nd Annual Card and Payment Developments in CEE (29-30 January 2008 in Vienna) conference.
1. What is the influence of SEPA implementation on the performance?
The project aims to improve the efficiency of cross border payments and turn the fragmented national markets for euro payments into a single domestic one. SEPA will thus enable customers to make cashless euro payments to anyone located anywhere in the area using only a single bank account and a single set of payment instruments.
2. What are the costs of SEPA implementation? Who will cover them?
We have an estimate for the Austrian market, which reads EUR 100 to 200 mio of cost. Besides the investment cost to establish the new SEPA infrastructure, a future reduction on the revenue side due to higher competition is also expected, but cannot be qualified.
3. What are the benefits of moving to EMV standard payment card system and how does it influence card fraud?
EMV guarantees interoperability for everything concerning the card, the terminal and their exchanges. The high EMV security standards will obviously reduce fraud.
4. What is the future of reduces interchange fees scheme?
The decision of the European Commission makes it much more difficult for banks to invest into new products/services in the cards business, as every investment is “only acceptable” if it is cost based and solely for the benefit for the customers. Development of a new pan-European card scheme might be hampered, as no bank will invest money, when there is no commercial benefit for the bank. The main question for bank will be: how can I cover my costs and make some profit out of the cards business.
The interchange discussions blocks currently any developments in the European cards market, we expect either a clarification from the political side or a change in the business model of cards payments.
5. What are the alternatives for interchange fees scheme?
If there is no Interchange left for the cards issuer, there might be considerations to increase the annual card fees or to introduce transactions fees. No one believes, that the decision of the European Commission will lead to reduced prices for customers, as the benefits out of the decision will remain only at the merchants. Maybe there will be a change from a three or four-party model to a 5-party-model.
However, it is clear, that by the interchange the issuer is - amongst other components - being compensated for guaranteeing the merchant the finality of the payment transaction. If, as desired, both issuing side and acquiring side have to charge their customers separately, this would result in paying the guarantee provision for the finality of the card transactions for the merchant by the consumer.
6. What is the importance of standardization
We consider the cards standardisation programme as a useful tool, especially to reduce costs for new developments as well as reducing fraud within the cards business The standardization process has to take into account the nature of the standard and of its probable effects on the relevant markets, on the one hand, and of the possible restrictions going beyond the main objective of the standardisation.
Standardisation as a whole is reducing IT and error cost in the processing chain for the industry and free resources for innovation.
Questions to the chairman:
7. What do you think what are the latest trends in card and payment developments?
Besides the discussion about a European card scheme, we assume the prepaid card sector as the most interesting market in the cards business. There are various possibilities of usage like gift cards, emergency cards and others.
In the general paymens market, e SEPA will change exisiting payments models and e-invoicing, mobile payments and the e-payment sector in the internet will generate new offerings for the customers.
8. Which issues were addressed at the conference?
Well, I see all those covered in the conference
9. What were the major conclusions, outcomes at the event?
I did not attend the full two days programme, but I got the impression, that the issues were of high interest to the audience and as a direct feed-back from individuals, some new features presented added value to the individual change projects underway. Such events always offer the possibility to network and to check , whether the own strategies and considerations are on the right track.
10. What do you think about the speaker panel and the audience?
A good mix of every stakeholder in this change process. Maybe one or the other representant of customer fora would be interesting to create discussions and to match the individual points of interest.
11. Could you mention any outstanding case study, best practice?
Next to my presentation - just a joke !!!! - I was impressed by the openness of Alenka Mejac Krassning,NLB about their clear informations and by the professional presentation of Herman Huizinga from ING Card
12. Did you enjoy chairing the event? How did you like the conference?
It is always an challenge to chair such events and I did not do it the first time. Overall, the composition of the panellists and the audience was very good for discussions and exchanges. I enjoyed it!
