The electronic Payment Systems Observatory - ePSO

Ergebnisse von TA-Projekten - Neue TA-Projekte

The electronic Payment Systems Observatory - ePSO

by Knud Böhle, ITAS, visiting scientist at the IPTS und member of the ePSO-team between October 2000 and April 2002

In May 2000 the Institute for Prospective Technological Studies (IPTS), an institute of the European Commission's Directorate-General Joint Research Centre (JRC), started to set-up and operate an "electronic Payment Systems Observatory", ePSO for short. 24 months later the pilot operation of ePSO came to an end. The project is regarded a success not only by EU Commission services and the European Parliament, but also by industry. The ePSO project is well documented. A brief project description (, all written material produced, and an ePSO Final Report (Maghiros 2002) summarising the project's activities are available from the project's website ( Although just a personal view, the present article aims to take a more analytical stance when sketching the project.

Rationale and Scope of ePSO

ePSO was co-financed by Directorate-General Enterprise under the ISIS-Programme (Information Society Initiatives in Standardisation). ISIS was an industry- and market-oriented programme, and not an R&D initiative under the Fifth Framework Programme. Its aim was to reinforce standardisation activities in the domain of ICT (Information and Communication Technologies). This aim translated into the primary objective of ePSO: to enhance information exchange in the field of electronic payment systems. This objective can be further refined by pointing out that information exchange may help to raise awareness, to reconcile the interests of many disparate players, to support consensus building and to stimulate co-operative efforts like standardization. At the highest general level the project was to contribute to more efficient retail payment systems and help to promote e-commerce in Europe. In more theoretical terms, ePSO can be described as an instance (or at least a nucleus) of a new approach to governance and policy making: the European Commission as moderator attempted to provide through ePSO a forum for debate among stakeholders, with interfaces to policy, society and the public in general.

Improvement of information exchange in the field of electronic payment systems might look like an easy task, but it isn't. First, European monetary and economic integration challenge the financial industries, which in the past developed along national lines, leading to fragmented and non-interoperable electronic retail payment systems. Second, electronic payment services are developed today for many application areas - such as communication, transport, health care, government - introducing many new stakeholders in the payment business. Third, global e-commerce with an ever increasing segment of commercial digital products and services, creates a new demand for standardised and widely accepted Internet payment systems and requires innovation processes with many partners involved. As a matter of fact communication across groups of actors, across sectors, and across borders in Europe has been limited. It is also worth pointing at the high political importance of payment systems innovation in Europe. A cheap, convenient, harmonized, and efficient retail payment system within the EU zone is clearly one of the most visible criteria of social and economic integration from the point of view of the citizens and SMEs alike.

Information exchange and communication has to be organized and requires input worth being communicated. A slogan of ePSO defining its task has been "communication & analysis". "Analysis" was the input expected from IPTS and partners to make communication happen. According to the range of actors addressed, the scope of the project comprised all issues related to electronic retail payment systems. Special emphasis was laid however on Internet payment systems for B2C (Business-to-Consumer) e-commerce. This focus was reasonable as in this area the pace of technological innovation is high, many new players have emerged, the cross-border aspect is especially important, and the lack of data and information is paramount. An extract of the first background paper defining the issues to be tackled may give a better idea of the subjects of analysis. Among the major issues identified in 2000 (Böhle et al. 2000, p. II) were:

The issues selected were already on the agenda of financial industries, technology providers, standardization bodies, policy, and research. Those issues were chosen, where information exchange and open debate looked promising. Before we take a closer look at the project structure, it is worth to have a look at forerunners of ePSO.

Some previous history

The ePSO project has roots in two projects. In 1997 the IPTS was charged by the Committee on Economic and Monetary Affairs of the European Parliament to carry out a project entitled "EMU and information society: key questions about the opportunity to combine the introduction of the Euro with new electronic payment technology options". The project was meant to provide a comprehensive panorama of the positions of all actors concerned with the European Monetary Union and the introduction of new payment systems within the EU. IPTS was supported by the ESTO network (European Science and Technology Observatory). ITAS, a member of the ESTO network, participated in and co-ordinated the ESTO study. ESTO contributed a report on Electronic Payment Systems in European Countries with a focus on Internet payment systems (Böhle et al. 1999), IPTS produced a report (Papameletiou 1999) containing the results of a large scale consultation among payment experts all over the world - Alan Greenspan included.

After completion of this project the European Parliament expressed a need for a sustained monitoring and communication effort in Europe in the field of electronic payment systems [1] . Proposing the ePSO project, IPTS built on experience of ITAS. Between 1997 and 1999 ITAS had carried out a technology assessment study on Internet Payment Systems for Digital Products and Services on behalf of the German Federal Ministry of Education, Science, Research and Technology. Innovative features of this project were an electronic discussion list (EZI-L) and an electronic newsletter (EZI-N). The introduction of "discourse elements" in this project turned out to be very favourable for the project's outcome and reputation (Riehm and Böhle 1999). These experiences were communicated to IPTS and were taken into account in ePSO. ITAS was later subcontracted to edit the electronic newsletter ePSO-N.

It has however to be underlined that the rationale of the ePSO project is very particular. While the TA study of Internet Payment Systems by ITAS added "discourse elements" to enhance the research process, ePSO was by definition not a research project, and its rationale was different, aiming primarily to organize communication among stakeholders. The production and distribution of deliverables was meant to serve this purpose, i.e. to structure and to stimulate communication among stakeholders and experts. The ePSO structure is explained in more detail in the following section.

The organisational structure: the actors

The organisational structure of ePSO can be described in terms of actors and deliverables: the ePSO team, ePSO partners and so called "virtual partners", a Steering Group, and the members of the ePSO-Forum were the main actors. The deliverables can be split into static and interactive ones. Background papers, the electronic newsletter, a database on Internet payment systems, and a bibliographical database on e-purses were the static elements, while the more interactive ones included the ePSO-Forum, Workshops and the final ePSO Conference. The ePSO website acted as hub informing about the project and documenting ePSO events, archiving the project deliverables and giving access to the ePSO Forum. This basic structure is presented in Figure 1.

Figure 1: The basic structure of ePSO

Figure 1: The basic structure of ePSO

The ePSO-team and ePSO partners

The ePSO-team was composed of permanent staff of the ICT unit of IPTS and three external experts who had joined the IPTS temporarily. The permanent staff acted as project management (Yannis Maghiros, project leader), built and maintained the project's website (Marcelino Cabrera and others), and built up a unique Internet payment systems database (Gérard Carat). More IPTS staff was involved for specific events like the preparation of workshops and the final conferences. The temporary staff was composed of an economist specialised in monetary affairs and payment system innovations (Malte Krueger from September 2000 to September 2001), a telecommunication and banking technology expert (Clara Centeno, since May 2001), and a sociologist/information scientist with technology assessment experience in the field of electronic payment systems (Knud Böhle, October 2000 to April 2002). These experts had to produce content, i.e. background papers, articles for the electronic newsletter and input for the expert discussion Forum. They built the bridge between IPTS, and the payment experts joining the ePSO-Forum. 

ITAS was partner of ePSO in charge of editing the electronic newsletter. Arnd Weber, Michael Rader and Ulrich Riehm shared this job in Karlsruhe. Some 20 experts from all over the world (see whoiswho.html) supported the effort forming an international network of correspondents. Further partners of ePSO, so called virtual partners, were CEN/ISSS (Comité Européen de Normalisation/Information Society Standardization System) and FIWG (Financial Internet Working Group). As ePSO has been situated in the context of a standardisation programme, close contact with CEN/ISSS was natural as it was with FIWG, a project of the European Commission addressing in the first place high level executives of the financial service industries. ePSO and FIWG were complementary as FIWG focuses more on wholesale payments and e-banking, while ePSO focussed on retail payment systems and Internet e-commerce payments.

Steering Group

The ePSO Steering Group was chaired by Christa Randzio-Plath, MEP, the President of the Economic and Monetary Affairs Committee of the European Parliament (ECON). Bernard Clements, head of the ICT unit of IPTS moderated when she was not available. The group was further composed of representatives of those European Commission services concerned with electronic payments (DG Enterprise, DG Internal Market, DG Competition, DG Information Society, and DG Health and Consumer Protection). From the financial industries, the major credit card companies and the major banking associations at European level were present. Also ECB (European Central Bank) and ECBS (European Committee for Banking Standards) were invited. Consumer organisations and technology providers as further stakeholders provided further members. Independent experts from academia and payment consultants, as well as the already mentioned partners and virtual partners, complemented the group. The composition of the Steering Group underlines the common interest in payment matters of the European Parliament and the European Commission. One major task of the Steering Group was to define the agenda of the project and to comment and later approve all background papers. At the same time the Steering Group has to be seen as a relevant feedback mechanism to standardisation bodies, European policy and industry.

The ePSO-Forum

The ePSO-Forum was set up as an electronic expert discussion list to bring together a large number of relevant market actors and experts for systematic exchange of strategic opinions. Technically a list-server distributed e-mails to the subscribers of the service and produced an archive of all discussions available at the project's website. The ePSO-Forum started in February 2002 with approximately 200 subscribers. A monthly net increase of about 10 % led to 750 members at the end of April 2002. Available data, presented at the Steering Group Meeting September 2001 by Yannis Maghiros, show the high level of industry participation (see Figure 2).

Figure 2: ePSO-Forum member affiliation

Figure 2: ePSO-Forum member affiliation

A closer analysis of the Forum discussions (cf. Maghiros 2002) reveals that the open Forum was relatively active with an average of 55 messages per month. While at the beginning, the ePSO-team had to take the lead and to push debate, industry participants took over subsequently and started to stimulate debate on their own. The number of 200 experts (excluding ePSO staff and partners) who actively participated in discussions is an indicator for the involvement of stakeholders. In some months up to 10 % of the subscriber base were participating actively. More than 20 threads were longer than 20 postings.

Another indicator of acceptance is that major credit card organizations, payment service providers, payment solution providers, EC representatives, renowed consultants and researchers showed up. The soundness of the list can also be underlined by the remarkable absence of spam and off topic messages. The ePSO experts were obviously able to establish a useful give and take relationship with the Forum. ePSO stimulated debate (15% of postings), sent the ePSO-newsletter regularly to all Forum members, and sent drafts of background papers to the Forum for comments. This feedback loop introduced a participatory element and helped to improve the ePSO deliverables. The Forum worked well for the announcement of recent EU policy regulations and policy documents. Experience with the ePSO Forum indicates the feasibility of an open forum as a means of "community building" within Europe to the benefit of decision-makers in policy and industry. Forum membership distribution per country is shown in Figure 3 (presented at the Steering Group Meeting September 2001 by Yannis Maghiros).

What has been achieved at pilot stage should however not be overestimated. Further efforts are required to extend the subscriber base and to include new sectors and more countries; more systematic expert moderation is required if specific policy issues and new topics (e.g. digital rights management, automatic road toll, payments in transition economies etc.) are to be introduced.