PEPPOL's Global Expansion

Introduction

PEPPOL stands for Pan-European Public Procurement Online. It is a network that enables businesses and governments to exchange electronic documents, such as invoices, across different countries and regions. PEPPOL is significant for global e-invoicing because it simplifies sending and receiving invoices electronically, regardless of the standards and formats used by other countries. PEPPOL also ensures compliance with each jurisdiction’s legal and technical requirements, making e-invoicing more secure and reliable.

This post discusses PEPPOL’s history and implementation in various countries and regions. We also consider the integration of continuous transaction controls (CTCs) in the PEPPOL 5-corner model for transparency and tax revenue generation.

History of PEPPOL

The European Commission birthed PEPPOL in 2008 to facilitate better cross-border public procurement. Development ran until 2012, culminating in the finalisation of PEPPOL specifications’ OpenPEPPOL, a Belgian non-profit institution, designed to govern the PEPPOL network.

After its introduction, PEPPOL evolved beyond the European Union (EU) and into other regions and territories. By March 2022, more than 78 countries were involved in the scheme, becoming the gold standard for electronic invoicing in locations as far-flung as Australia, New Zealand and Singapore.

Today, PEPPOL has two primary components: discovery and delivery. Discovery is the process of:-

• Identifying the electronic procurement standard supported by a particular participant
• Finding out how to reach them through a web application programming interface – the “access point” (AP)

Meanwhile, delivery is the process of transferring procurement documents through various APs, using the specific eDelivery AS4 protocol. PEPPOL aims to offer participants a cost-effective way of exchanging sensitive business documents between systems and platforms by using these components.

PEPPOL's Expansion

Since PEPPOL’s pilot scheme ended in 2014, its expansion has continued unabated. The EU played a critical role in providing the legal and societal frameworks for the program to succeed and for its global rollout.

For example, the European Parliament and the Council adopted Directive 2014/55/EU in 2014. This legislation mandated a common e-invoicing standard on public procurement by April 2019. Soon after, PEPPOL became a member of an exclusive club of European-compliant e-invoicing networks.

Later in 2017, the Connecting Europe Facility (CEF) programme launched the CEF e-invoicing service. This initiative provided technical support to public and private institutions struggling to implement e-invoicing solutions based on PEPPOL and existing pan-European standards. The drive helped more private entities and public administrations facilitate their transition, preparing them for the April 2019 deadline.

In 2019, the deadline for implementing Directive 2014/55/EU arrived, and most EU countries adopted PEPPOL at the national level. In March 2020, PEPPOL had amassed over 300,000 participants from 34 European countries and EU member states (and beyond).

Also in 2020, the European Commission published a communication on shaping Europe's digital future, which it hoped would help the bloc remain internationally competitive. The successful implementation of PEPPOL formed a cornerstone of its belief that EU-origin digital solutions could thrive, scale, and replicate themselves across global regulatory frameworks.

Then, in 2021, the European Commission launched the European Digital Identity (EUid) initiative. The project’s primary objective was to provide EU citizens with secure and trusted methods for accessing goods and services across the continent. In addition, it envisioned PEPPOL integration for safe and sure e-procurement transactions.

Today, PEPPOL remains in high use throughout the EU, particularly for e-invoicing. Other documents, such as purchase orders, delivery notes, and catalogues, are less widespread but also supported by the system.

The following sections are some examples of PEPPOL expansion in individual countries:-

United Kingdom (NHS)

The UK began implementing PEPPOL standards in January 2016, six months before the Brexit referendum. The Department of Health and Social Care later mandated the technology for the NHS and all its suppliers.

The NHS uses PEPPOL to enhance procurement. PEPPOL standardises how healthcare providers buy goods and services, reducing errors and the need for administrators to manage procurement issues. It incorporates GS1 standards – a foundation businesses use to identify and capture product, asset, and location information – for greater interoperability.

NHS-wide implementation of PEPPOL required moving all the service’s electronic document exchanges with suppliers to the platform by September 2019. Now, suppliers must connect to the network via an Access Point provider for the NHS supply chain (i.e. NetEDI or Transalis). Legacy EDI interfaces and messages are closed.

PEPPOL impacted the UK’s public sector significantly by improving the efficiency and transparency of operations and making procurement processes more flexible and reliable. It also facilitated the institution’s capacity to conduct cross-border trade while complying with EU e-invoicing regulations. Like the NHS, other administrations and departments could operate more seamlessly and securely.

Singapore

Singapore became the first non-EU state to adopt the PEPPOL e-invoicing network in 2019. The city’s Info-communications Media Development Authority (IMDA) now manages PEPPOL Access Point providers' approvals and certifications and sets national rules under the PEPPOL framework.

PEPPOL’s implementation in Singapore is helping businesses improve efficiency and reduce costs. Faster payment cycles and new financing options are laying the foundations for greater digitisation in the country, enabling firms to trade more seamlessly with each other internationally (provided they are also on the PEPPOL network).

The Singapore government continues to actively support the initiative. In January 2020, it added a new channel for suppliers to submit e-invoices via PEPPOL (which has since become the most popular method). The IMDA also announced the E-Invoicing Registration Grant in the same year. It included a one-time $200 grant to every organisation joining the PEPPOL network in the country.

PEPPOL’s impact in Singapore has been tremendous. The IMDA estimates 50,000 companies are already signed up and that the network has handled a massive 1.2 million invoices since its launch in the country. Businesses are reporting sustained profits and easier international transactions with partners, and productivity is improving. Customer satisfaction is on the rise, and disputes are rarer than before.

PEPPOL is also facilitating Singapore’s integration into the ASEAN region. The framework’s use in neighbouring countries is driving cross-border business activities and reducing reliance on distant international partners, such as the US and EU.

Australia & New Zealand

Like Singapore and the EU, Australia and New Zealand have also formally adopted the PEPPOL international framework for e-invoicing and other procurement documents. As in other regions, implementation helped to speed up payment processes and improved accuracy.

Australia and New Zealand have been working together for some time to create a common approach. Authorities have consulted with various stakeholders over several years on the localisation requirements and specifications for e-invoicing and other billing documents. The countries are members of the international PEPPOL community and seek to share best practices and take part in activities and events to promote the system.

However, some challenges have also arisen. For instance, Australia and New Zealand need to localise PEPPOL to meet their individual needs. Their legal environments are significantly different from the EU, and operationalising the system is facing some headwinds. For example, Australia now uses GST when referring to goods and services tax, not VAT (value-added tax). Both countries also need to put oversight frameworks in place to govern the use of the PEPPOL network and support business users (as Singapore has done).

Japan

Japan is one of the most recent countries to adopt the PEPPOL framework for e-invoicing and document exchange. The country’s journey with the network began in 2020 with the formation of the E-Invoice Promotion Association (EIPA), a public-private partnership dedicated to promoting e-invoicing in the country. The EIPA’s first objective was to establish PEPPOL as the basis for Japan’s billing and e-invoicing standard through the Japan PEPPOL Invoice Network Transaction (JP PINT). The organisation is now seeking to align the country’s invoicing requirements with international standards to improve taxation procedures and enhance global procurement.

In September 2021, Japan became a member of OpenPEPPOL and gained authority to oversee the coordination and implementation of the scheme in the country. Now a PEPPOL Authority, Japan can accredit PEPPOL access point service providers without international approval.

Japan is still building the foundation of its new PEPPOL e-invoicing standards. The country expects them to take effect by October this year. After this date, companies will only send and receive e-invoices with their domestic and foreign counterparts, bringing benefits such as cost reduction, fraud detection and error prevention.

However, the Asian country’s implementation of PEPPOL has not been plain sailing. Japan has struggled to adapt the scheme to its specific legal and technical frameworks and raise stakeholder awareness. Many firms in the country remain ignorant of the new system’s requirements.

Japan is also struggling to provide support and guidance to participants. Business users find it hard to get the technical assistance they need.

Other Countries

PEPPOL is also making its way into other countries globally on virtually every continent. Again, implementation has not been plain sailing.

Canada introduced PEPPOL in 2019 as part of the Canadian Electronic Invoicing Initiative (CEII). However, the country faces several barriers to wider implementation, including a low awareness among potential users and problems relating to the diversity of federal and provincial regulations. Harmonisation isn’t a fundamental tenet of the Canadian political landscape, which is different from the EU.

The Confederation of Indian Industry (CII) and the Ministry of Electronics and Information Technology (MeitY) launched PEPPOL in 2020 with support from OpenPEPPOL. Authorities believe the network will offer regional benefits by providing a common exchange network for the country’s millions of small and medium-sized businesses (SMEs). The initiative also ties into the Indian government’s desire to digitise more of the economy, particularly in the health sector.

However, challenges for the 1.4-billion-people-strong state are considerable. They include the need to align PEPPOL with the national e-invoicing system (GSTN) and the general lack of awareness of these standards.

Dagang Net Technologies, a subsidiary of Dagang NeXchange Berhad (DNeX), introduced PEPPOL to Malaysia in 2019, becoming the country’s official service provider. This integration and implementation allowed Malaysian firms to connect more easily with buyers and suppliers in Europe, enhancing the country’s e-invoicing and e-procurement operations.

However, like India, Malaysia faces several significant PEPPOL implementation challenges, including a lack of awareness and understanding among stakeholders, and the need to integrate it with existing solutions. Regulators have also been slow to change local laws and standards to harmonise them with the scheme, delaying progress further.

XnFinity Solutions (Pty) Ltd introduced PEPPOL in South Africa in 2020. The official service provider enables South African businesses to connect with European firms and other participating companies globally, enhancing transparency, interoperability, and procurement.

The main problem in this region has been a lack of trust. Stakeholders are second-guessing the government’s motivations, wondering why a new scheme is necessary. The other issue is the need to align the system with the national e-invoicing system (SARS). PEPPOL currently operates differently, making a seamless integration more challenging.

Lastly, the US – the world’s largest economy – is also implementing PEPPOL. Edict Systems Inc. introduced it to the country in 2019 as the official service provider responsible for streamlining e-invoice operations.

Unfortunately, the introduction saw limited success. Stumbling blocks include diverse state laws and a lack of interoperability with existing systems.

PEPPOL International - PINT

Before PINT, PEPPOL was a somewhat EU-centric concept designed for economies with extensive harmonisation and standards. The system worked in Europe but not overseas.

PINT made PEPPOL’s global expansion into new regions and markets easier by supporting PEPPOL standards outside the EU trading bloc. Specifically, it offered:-

• A framework for APs
• New PEPPOL Authorities (PAs) in countries overseas
• Services supporting the alignment of local business rules with PEPPOL requirements
• Collaborations and knowledge-sharing within the global PEPPOL community

As such, the PINT initiative plays a critical role in PEPPOL’s global expansion. The scheme in non-European countries harmonised trade and improved companies’ public procurement processes.

Firms and countries experienced better competitiveness, efficiency and transparency in their leading industries. Trade barriers declined, and interoperability improved.

Future E-Invoice Initiatives

Interestingly, PEPPOL is only just getting started. Authorities plan several more rollouts in the coming years, improving international trade significantly and, hopefully, reducing consumer prices.

Many countries have made (or are planning to make) e-invoicing for business-to-government transactions mandatory using PEPPOL-compatible schemes. For example, France started operating a phased approach for B2G e-invoicing in 2017 using the CHORUS PRO platform, which accepts PEPPOL BIS 3 invoices. The country also passed legislation to mandate business-to-business (B2B) e-invoices from July 1, 2024, forcing organisations to begin preparations immediately.

Poland – one of the EU’s most dynamic economies – adopted a similar approach in April 2019, launching the PeF platform. It accepts electronic invoices in PEPPOL BIS Billing 3.0 formats (and other standards). Business-to-government invoicing will become mandatory in the country after November 2020, with obligations extending to all firms shortly.

When these countries fully adopt e-invoicing, it will accelerate PEPPOL’s implementation across Europe and further afield. Creating a common standard and network for invoicing will accelerate the pressure on overseas countries to adopt the same protocols to facilitate trade.

Specifically, the main effects will be:-

• Interoperability between various systems and jurisdictions
• Simplification of cross-border trade
• A reduction in administrative barriers
• Support for digital transformation in global markets
• More transparent processes

PEPPOL 5-Corner Model and CTCs

The PEPPOL 5-corner model is a proposed extension of the existing four-corner model that will add tax authorities as an extra “corner” in the network. The system’s goal is to enhance the operation of CTCs, validating business transactions as they occur.

Continuous transaction controls (CTCs) are a tax compliance method involving near-real-time reporting of business transactions to authorities. Governments hope this method will reduce VAT fraud and increase tax revenues by providing more visibility and control over transactions.

Integrating CTCs with the PEPPOL 5-corner model should generate benefits for e-invoicing and tax authorities. For instance, it may:-

• Improve tax compliance
• Facilitate better data analysis and invoicing
• Build transparency and trust between stakeholders
• Simplify the invoicing process
• Reduce the number of errors and disputes
• Enhance security and privacy
• Accelerate digital transformation and innovation

Conclusion

PEPPOL is a network that facilitates the exchange of documents between various public and private organisations and entities within the EU and internationally. Initial work on the scheme began in 2008, with expansion occurring quickly after the full roll-out in 2012. Ten years later, most of the world’s major economies have joined or are considering joining the scheme and it is taking off. Current member countries include Australia, New Zealand, Singapore, Canada and most of Europe.

The impact of PEPPOL’s global expansion is significant. The system will improve cross-border trade while reducing the risk of administrative costs and errors. It will also improve tax compliance and foster innovation as more firms move towards digitising and automating various payments.

Work, though, is not done. PEPPOL will continue to grow and develop as its inherent advantages become clearer. Potential future developments include greater harmonisation, alignment with other e-procurements standards, and emerging technology adoption, such as AI and blockchain. It may also become more involved in the Digital Economy Partnership Agreement, integrating parts of Latin America.

Ultimately, PEPPOL is an enabler of digital transformation in the early 21st century. It may facilitate more international transactions and interdependence in a multi-polar world.