EUropean PAYment circuit

Acronym of the case:

EU-Pay

Web address of the case:

http://www.eu-pay.org

Country of the case:

Italy , Pan european

City/region:

Prato - Tuscany

Posting Date:

5 December 2007

Last Edited Date:

30 April 2009

Author:

Susie Ruston (21c Consultancy Ltd)

ePayments | SEPA | efficiencies

Type of initiative

Project or service

Case Abstract

EUPAY is designed to bring the benefits of quick and easy-to-use electronic payment mechanisms to all citizens. EUPAY makes paying bills to Public Authorities throughout Europe easier and more convenient than ever before by providing a multi-channel payment collection system that accepts cash or credit which can be easily deployed at a wide variety of everyday locations including supermarkets, leisure centres and libraries. Citizens benefit from the ability to pay bills at the location of their choice â€“ regardless of whether they have a credit-card or bank account. Public Authorities benefit from a simple, easy-to-use ePayment application that integrates multiple channels seamlessly and cost-effectively.

Description of the case

Domain

eGovernment

Topic

Efficiency & Effectiveness, Benchmarking | Inclusive eGovernment | Infrastructure | Open Source

Sector

Internal market | Tax | Other

Start date - End date

May 2006 (Ongoing)

Date operational

September 2006

Target Users

Business (industry) | Business (SME) | Citizen | Intermediaries

Target Users Description

The direct users of EU-Pay are Public and Private entities and Utlities who use the system to collect payments due to them. The service is especially targeted at Local Authorities who currently require citizens to go to public offices to pay taxes, school fees, parking permits, fines (especially when they are not capable to use on-line payments and when these service are not yet available). The system can also be used by private company in particular by public service operatorsor or public utilities. The end-users of the service are citizens and enterprises. EU-Pay is especially targeted are citizens who do not have bank accounts with direct debits facilities, who do not use credit cards and who have no access to the Internet. The project has been already positively concluded with a selected group of users, and it has been put inÂ the fully operational phase in the country that promoted it. In particular it is ised in Prato Province city area. After the successful conclusion the project the service has been requested and introduce, with encouraging results, also by theÂ cities of Pisa, Livorno, Pontedera and Pistoia. The are specific and detailed plan for commercialising the service all over in Italy. Moreover some interests have been manifested by some private entities for funding a big expansionÂ of this service at pan European level as it was originally foreseen by the eTEN project initiative. The Municiapality of Prato, that owns the IPR for all the elements the services, is willing to organise a pan-european bid to fully exploitÂ the service potential through the creation of a new Eurpean Company. The figures regarding the impacvts of the service running nowadays are reported in the following sections.

Scope

International

Status

Operation

Language(s)

Bulgarian | English | French | German | Italian

Policy Context and Legal Framework

Electronic payments are increasing steadily throughout Europe, as more and more people are becoming comfortable with technology. Younger generations, in particular, prefer the convenience of electronic over hard currency. Nevertheless, with the exception of the major international financial systems national electronic payment systems are still highly fragmented, particularly at the local level.From a financial perspective, Europe is rapidly becoming one single geographical area with unified fees and standards and an entirely open competitive environment. In this context, the continued fragmentation of electronic payment systems across the continent is out of step with recent financial trends and represents a barrier to further economic integration. The full introduction of pan-European SEPA standards in 2008, and the definition of the new Payment Service Dicertive, however, present a strong opportunity to rectify this barrier through the introduction of a new electronic payment mechanism that specifically aims to unify disparate local systems.As an EU-funded eTen Project, EUPay is directly designed to meet this need. eTEN is a European Community programme providing funds to help make e-services available throughout the European Union. The eTEN programme helps to stimulate the deployment of innovative, trans-European e-services of social or economic interest. These services are intended to contribute to: growth within the European Union, employment, social cohesion and helping everyone participate in the new knowledge-based economy. Toward this end, EUPAY meets the key objectives of the eTEN programme by: stimulating economic activity at the local level, giving to Public Entities and Utilities, as well as small and medium sized enterprises, a new service to provide to customers, bridging the digital divide and empowering everyone to benefit from new mobile and internet payment options.

Project Size and Implementation

Type of initiative

Inclusive services of general interest

Overall Implementation approach

Partnerships between administration and/or private sector and/or non-profit sector

Technology choice

Mainly (or only) open standards | Open source software

Funding source

Public funding EU | Public funding local

Project size

Implementation: €500-999,000

Yearly cost:

€49-299,000

Implementation and Management Approach

Following the successful integration and market validation of a wide variety of payment mechanisms, a new European-wide company will be established to manage and market the service infrastructure. Payment channels in different countries will be managed locally, whilst the core infrastructure will be managed centrally.

The service operation will be supported by a central new company in charge for installation, development and manintenance of the centralised infrastructure. At moment this central infrastructure is managed by the Municipality of Prato but it is planned to fully privatise this through an international bid.

The new company, according to the constraints and regulations contained in the European Directive on Payment Service (to be implemented by all member states before the end of 2009), will creaty subsidiaries in all profitable markets. The market validation project has already identified the level of market potential in almost all EU countries.

The identified business model for the service operation is very veryÂ adaptable to all the different market conditions and user expectations that vary from one Eu country to another. The basis of this model is, however, that a fee will be recognied to the service operator for each payment transaction.

Some already existing methodologies have been used, during the eTEN project activities, to analyse and demonstrate the advantages, for entities that can potentially adopt the service for their peyments, and to calculate ROI for them.

This tested methodologies and model will be used, in the commercialisation of the service, to convince new public and private entity to enter in the payment circuit.

Technology solution

EUPAY runs over an Internet-based central IT infrastructure manages all payment elements including identification of the service user (i.e. citizen) and payment beneficiary (i.e. Public Authority) and the recording and receipt of payments.

This central infgrastructure is mailny based on Open Source platforms, to offer web pages and webservice for customer infrastructure integration.

The EUPAY system maintains the details of expected payments in a central database that will be accessible to any channel supported by the system â€“ regardless of location. Each payment will have a unique ID code whichÂ is reported on all documents (including bills and reminders) and used to facilitate easy identification of the payment via the chosen channel.

The eTEN project paid a particular attention on the creation of a efficient standard format to assing this unique ID to a generic expected payment of a generic entity, and on how to represent thia Unique ID on documents that are normally sent to the users. In particular the elaborated standard make very easy to implement payment in different places and through different instrument, spanning from Commercial shops up to supermarket checkouts.

Information about the payment madeÂ is automatically transferred to the back office of the payment beneficiary (i.e. the Public Authority) on. The software for EUPAY is open source and the delivery mechanism is the Internet. The base technology is a set of dedicated web servers protected by a firewall and secure transfer protocols.

The identity of the service usersÂ is verified via strong authentication mechanisms. The technologies used to implement the front ends of each implemented channel depend on the specific channel, but utilises existing technologies in wide usage (e.g. Call centres, GSM, Supermarkets, PC, Kiosk).

Impact, innovation and results

Economic effects

€1,000,000-5,000,000

Impact

Preliminary results (coming directly from the eTEN project activities) reveal strong satisfaction from direct users such as Local Authorities, public utilities and citizens alike.

Local Authorities in Italy have found the system cost-effective and easy-to-use, whilst public utilities in Germany have used EUPAY to increase efficiency. Meanwhile, citizens without access to traditional online payment mechanisms such as a credit card or bank accounts have appreciated the increased convenience and choice that EUPAY has given them.

The Consortium has disseminated EUPAY widely at conferences, workshops and events throughout Europe, including the recent eChallenges Conference at the Hague, the World eDemocracy forum at Issy-les- Moulineaux, and the closing workshop of the eCitizen project in Vaasa, Finland. A key element of the EUPAY dissemination strategy has been the creation and widespread deployment of interactive videos featuring use of the systems in various European contexts.

The Consortiumâ€™s dissemination activities have attracted widespread interest in EUPAY from a variety of actors, including public sector government officials from the EU and Austria and private sector companies from throughout Europe. EUPAY aims to create a sustainable, self-funded business model that other eTEN projects can replicate. As such, EUPAY is currently exploring cooperative initiatives with RISER, an eTen funded project to provide a pan-European address base, as well as with select venture capitalists.

The private sector, in particular, has expressed a strong interest in helping to take EUPAY forward for the following reasons: - The Market. The payment market in Europe is growing and diversifying due to the increasing popularity of electronic systems generally, a new trend toward trans-national payments, and globalisation - The Opportunity. EUPAY represents a unique opportunity to unify a fragmented market through a consolidated, centralised system with low deployment costs. - Innovation. EuPay integrates multiple payment channels ranging from home, mobile and the Internet all the way to cash and credit payments in local shops - The Team.

The EuPay team is a group of partners from 5 diverse European countries with an established track record in deliverying successful Pan-European projects. The team has indepth knowledge of cross-country collaboration and is working together closely to guarantee the seamless deployment of the EuPAY system throughout Europe - Return-On-Investment. The revenue model is simple and profitable: small fees over large transaction volumes. The model is beneficial to end-users - revenues create a recurrent income and profit stream that accommodates specific ROI strategies.

As far as the current volume of users is concerned, considering the real environment in which the service is fully operated (Municipality of Prato and part of Tuscany Region in Italy) The following figures have achieved up to now:

Payments per year managed by the system: 290.000

Entities already using the service: 10

Implemented Channels: Web, commercial shops, self-service terminals,Â Supermarket checkouts, bank transfer.

The Municipality of Prato is already dealing with other public/private entity interested to the usage of the serevice. Among them:

- All health care utilities of Tuscany region

- Other public institutions in the Province area of Pistoia

- Equitalia (National wide company in charge for credit dunning)

- Gas and Water utility of Prato and Pronvice area

These potential customers has a payment potential of millions of transactions per year.

The final business plan foresees to achieve at least 3 Million payments per year in 5 year of service activites. This will produce about 350.000 â‚¬ of net revenues per year (after tax).

The break-even point of the service is expected to be achieved in 1-2 year from the beginning of the operational phase.

However it has to be considered, that huge savings have been produced to the Municipaloty of Prato (and in all other entities adopting the service) thanks to the automatization of the paymnent collection processes made possibler by the new eService. In particular at least 5 periferalÂ offices have been closed, while more than 60 new service delivering points, spread in the Province territory, have been made available for the local population.

Track record of sharing

EUPAY was named, in 2007, eTEN project of the month and has been widely featured in best practice forumâ€™s such as the EU portal and numerous EU project workshops throughout Europe. The Consortium regularly provides interactive demonstrations of the system in action that showcase both the citizen and Local Authority experience. Almost universally, peers, public sector organisations and the private sector alike have responded positively to the systemâ€™s cost-effective and easy-to-implement solution to a growing need throughout Europe for a unified payment system that addresses the challenge of the Digital Divide.

Following discussions and presentations about EUPAY, the consortium has been approached by media, government officials and private investors to learn more about the social, operational and commercial aspects of the system. In particular Tuscany Regione and Italian Ministry of Innovation are started dealing with Prato Municipality in order to generalise the results of EU-Pay project at Regional and National level in terms of standardisation of Unique payment ID. Tuscanu Region also open a discussion with Prato Municipality inorder to be helped, by its experience in multichanel payment service, in setting up the Regional Payment supportin infrastructure. As consequence of this the Eu-Pay payment circuit will be fully integrate with this regional infrastrucure starting from the summer 2009.

Positive feedback from the private sector, in particular, is contributing strongly to the creation of a high impact business case that will be used to take the project forward following its formal completion next March. Meanwhile, discussions with government officials from throughout Europe have helped to define the social need and value of the system, as well as to chart a future strategy for deploying a Pan-European mechanism that accommodates national legislative requirements whilst at the same time answering local needs. Government officials have validated the Consortiumâ€™s decision to deploy a flexible, open source system that compliments rather than replaces existing local software systems. Peers from eTen projects that likewise aim to enhance economic growth, social cohesion and digital inclusion throughout Europe have liased regularly with the EUPAY consortium in order to learn more about the systemâ€™s unique emphasis on helping to bridge the digital divide in a sustainable manner that benefits the public and private sector alike. Use of open source software, pre-existing and widely available channels and easy-to-navigate interfaces have proved highly popular with all stakeholders.

The project has a very high potential for sharing its achievemnte with other actors throughout Europe. The adoption of the service is very easy to be achieved and can be implemented in differnt way dependign on the level of interactivity that is requeste between the back-office and the front-office.

The possibility to include in the multi-channel circui also supermarket checkouts represent a strong innovative idea that cal lead, especially for citizens, in a huge saving of time in managing their interaction with Public administration and utilities in general.

Lessons learnt

Lesson 1 - Keep systems simple - End users value a system that is easy to integrate into their back offices, presents a low deployment risk to existing technologies and is cost-effective to maintain - Direct users increasingly demand clear, accessible interfaces that anyone can intuitively navigate - Open source software provides the most cost-effective way to deliver innovation in a user-friendly context

Lesson 2 - Do not assume that sustainability clashes with social responsibility - The digitally excluded represent a largely under-tapped market for many small and medium sized enterprises - Empowering this sector to benefit from technology to the same extent as the digitally included can generate powerful cost savings for the public sector - The private sector is keen to support projects that can generate profit in a socially responsible manner, particularly if the project fills a market gap and can demonstrate year-on-year returns on investment

Lessons 3 - there are big difference in European market of ePayments. This differences strongly influence the business model for a Paymetn Service implementation.this leads to many technical difficulties in implementing electronic multi-channel payments for Public Authorities. This difficulties are mainly due to the differences in the management scheme for the differnet services.

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