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The friction triggered by the Trump administration in the US means market and regulatory players in the EU are more motivated than ever to create local champions in the payments market.
Anxiety over reliance on external payments providers has reached fever pitch in the EU. It has been on the agenda in the bloc for some time now, although it was significantly less of a priority during the calmer Biden years.
Now, however, the confident and relentlessly undiplomatic Trump presidency is keeping European payments players awake at night.
The region’s reliance on Visa and Mastercard is a worry for central banks and merchants, who are also concerned about overwhelming consumers at the checkout if they have to choose between the international schemes, EU schemes and alliances, cash, and – as seems inevitable – a digital euro.
On the plus side, it seems like collaboration and interoperability are becoming more likely than ever.
“One good thing about Trump is that he gave Europe the kick up the arse it needed,” a source told Vixio on the conference floor at one event.
Do it, before it’s too late
The stakes have never been higher, and the creation of a European payments solution will involve some tough decisions.
“It is important that we have a homegrown European solution,” said Inge van Dijk, payments and infrastructure chief at the Dutch Central Bank, speaking at the Banking Scene conference in Brussels.
However, she acknowledged, as many others have before, that “this is not the first time we’ve tried this”.
“We are probably at 10 past 12 already,” she cautioned, stressing the need for initiatives such as the European Payment Initiative’s (EPI) Wero solution to succeed. “We are all pushing for it.”
EPI had been written off by many, thanks to a bumpy start that saw banks such as Commerzbank and DZ bank quit the project, and Spanish shareholders desert it.
EPI CEO Martin Weimert even called on the EU’s financial regulators for a “regulatory pause” and urged them to “put their money where their mouth is,” regarding access to public funds to help the then-ailing project get to market.
However, the scheme’s prospects have since begun to look up, with Wero focusing on instant and account-to-account (A2A) payments, including the acquisition of Belgium’s local scheme Payconiq and the Dutch payments champion iDEAL.
Discussing the amalgamation of iDEAL into EPI’s sphere, van Dijk suggested that it needed to happen for the greater good.
“It is great to have projects like EPI out there, but it means you have to kill your national darlings,” she said. “That is not easy.”
“The topic now on the table is the interoperability aspect, and with interoperability, that is on a technical level.”
She pointed out the “vast graveyard” of interoperability initiatives that have failed to come to fruition.
“Take the bite now, kill your national darlings, and move straight away for the better of Europe.”
End the fragmentation
This sense of urgency was also notable at Money 20/20 Europe in Amsterdam, where national schemes such as Spain’s Bizum and Portugal’s SIBS were present.
Bizum’s Fernando Rodriguez Ferrer warned during a panel discussion about payment visions in the UK and the EU that one of the issues is that many individual European countries are focusing on payment visions nationally, which has been the case with Ireland and France.
“We have a lot of fragmentation, and this is embedded in the regulation that is trying to shape the payments landscape in Europe,” said the chief international business officer.
During the conversation, he cautioned that Europe needs to “join forces”, saying that, “In the end, that is the only way we can compete with the international players on the European level.”
Madalena Cascais Tomé, CEO at SIBS, agreed that “there is definitely room to progress” and to “have a more harmonised European payments ecosystem”.
Tomé suggested that a key driver for fragmentation has been supervision rather than regulation itself.
“We need to recognise that over the last few years, payments has become a very critical infrastructure.”
“It is across various touchpoints and is the oil and blood of the economy,” she said.
She added that what Europe really needs now is a strategy in this area, similar to the ones it has for defence and telecommunications.
“This is to make sure that not only the regulation and the vision is unique, but also that the institution and the supervision is also harmonised to make sure that across Europe we have the same rules and supervision, and the opportunity to enlarge our European payment champions that are striving so they can expand and become pan-European.”
Scheme overkill?
SIBS and Bizum are both part of the European Payments Alliance (EuroPA), alongside a range of organisations such as Poland’s Blik.
However, the fact that EuroPA is running alongside EPI adds to the sense among Europe’s merchants that consumers are likely to be overwhelmed at the till.
There are pros and cons of both being in existence. The case for includes the idea that having two initiatives could spur healthy competition.
If one underperforms or fails to gain traction, the other could provide a fallback or an alternative route to achieving European sovereignty in payments.
The two initiatives also reflect a distinct set of regional strengths.
Wero is rooted in Benelux, building on national success stories such as iDEAL, whereas EuropPA is rooted in the effectiveness of national schemes such as Blik in Poland, Bizum in Spain, and SIBS in Portugal.
This specialisation allows each to leverage local champions and strong consumer loyalty in their respective markets.
In addition, they follow different strategic approaches. EPI is focused on A2A instant payments, aiming to create a pan-European wallet for both in-store and online use, with the potential to expand into areas such as consumer credit and digital identity.
EuroPA, by contrast, acts more as a coordination layer to enable interoperability between already-successful national schemes. These differing models could cater to distinct market needs and segments.
However, there are also downsides to be considered.
Having multiple schemes risks confusion for merchants, which would delay adoption, and weaken Europe’s bargaining power with international players such as Visa, Mastercard, PayPal, and the big tech players.
Ironically, a lack of interoperability between two rival EU schemes could inadvertently strengthen the dominance of the very global players Europe is trying to challenge.
Merchants, in particular, want simplicity, which would come with a widely accepted single solution.
Neither EPI nor EuroPA alone currently has the scale or brand recognition across the EU that Visa and Mastercard enjoy, and competing European schemes could mean a split in resources, diluted investment opportunities, and a lack of the critical mass needed for success.
This scenario does not bode well for EU sovereignty, and it is not hard to see the European Commission or others making the case for interoperability and deals behind the scene to ensure that any solution can effectively reduce the reliance that Europe has become so worried about.
