Six of the ten new EU countries affirmed their readiness to join the Step2 euro payments system shortly after accession on May 1, with 19 banks in line to join as indirect participants, according to Electronic Payments International. Cyprus, Hungary, Lithuania, Malta, Slovakia and Slovenia are ready to join Step2, while the Czech Republic, Estonia, Latvia and Poland, are aiming to join in May 2005. In the 12 months to April 2003, Step2’s first year of operations, 59 EU banks became direct participants, while 1,200 banks signed up as indirect participants, namely to send/receive messages via a direct participant.

To encourage more banks to move their domestic traffic to Step2, EBA Clearing, the primary backer, is promoting a pan-European direct debit scheme, while bank-to-bank messaging network, Swift, is working to link banks in new accession countries to its own system. For multi-national corporations, Swift’s new Internet-based bank messaging platform, SwiftNet, will facilitate the establishment of a single euro account from which corporate payments can be made. With banks in Europe and the US now linking to SwiftNet for cross-border payments, Step2 can harness this synergy to increase transaction volume on its system.

As a pan-European automated clearing house (PE-ACH), Step2 is initially handling small-value payments within the EU, but is intended for any accountholder of an euro account in the EU, regardless of their geographical location. Non-EU banks that connect to Step2 may gain a competitive advantage over those that do not, due to having a direct conduit to business on the European continent. SwiftNet, for instance, could enable multi-national corporations to centralize their banking relationships, and the fact that Step2 recently began letting banks access its systems via SwiftNet, bodes well for its future operations.

(Electronic Payments International)