European alternatives to Visa and Mastercard ‘urgently’ needed, says banking chiefUS payment processing companies account for about two-thirds of card transactions in Eurozone
Europe “urgently” needs to reduce its reliance on US groups such as Visa and Mastercard, the head of a banking alliance has said, as officials warn that their market dominance could be weaponised if transatlantic relations were to deteriorate.
“We are highly dependent on international [payment] solutions,” said Martina Weimert, chief executive of the European Payments Initiative (EPI), a consortium of 16 European banks and financial services companies.
“Yes, we have nice national assets like domestic [payment] card schemes . . . but we don’t have anything cross-border.’’
“If we say independence is so crucial and we all know it’s a timing issue . . . we need action urgently,’’ she said.
Visa and Mastercard accounted for almost two-thirds of card transactions in the Eurozone in 2022, according to the European Central Bank, with 13 member countries lacking a national alternative to the US providers. Even where domestic schemes exist, they are declining in use.
With cash use falling, European officials have become increasingly concerned that US payment companies’ power could be weaponised in the event of a serious breakdown in relations.
It is one of several critical areas where officials fear the bloc has become too dependent on US companies, with Belgium’s cyber security chief recently warning that Europe had “lost the internet” owing to the dominance of American tech giants.
“Deep integration created dependencies that could be abused when not all partners were allies,” warned Mario Draghi, former ECB president, in a recent speech. “Interdependence, once seen as a source of mutual restraint, became a source of leverage and control.”
The EPI, whose members include BNP Paribas and Deutsche Bank, launched a European alternative to Apple Pay called Wero in 2024. The digital payments scheme now claims to have 48.5mn users in Belgium, France and Germany, with plans to expand to online and in-store payments by 2027.
Weimert said banks and merchants largely had ‘’awareness’‘ of the need to build a cross-border European payments network, but the “geopolitical context” meant it was now “becoming a mainstream topic”.
The ECB said that private sector initiatives in the past, including an earlier plan by the EPI to launch a rival card scheme, “have shown the difficulty of scaling”, with a spokesperson citing how “actors involved struggle to align on common standards”.
The central bank is promoting the digital euro, a public initiative to make payments digitally across the Eurozone, to strengthen the bloc’s monetary sovereignty.
Piero Cipollone, the ECB executive board member in charge of the project, emphasised its importance last week. “As European citizens, we want to avoid a situation where Europe is overly dependent on payment systems that are not in our hands,” he said.
The project is proving divisive among European politicians, and some lenders have lobbied against it, claiming it would undermine private-sector efforts. A vote in the European parliament later this year is likely to go down to the wire.
Merchants in the Eurozone would need to accept digital euros in store and online by 2029, when the ECB plans to start issuing the token. The underlying infrastructure would also be open to private-sector initiatives to build on.
The digital euro could ‘‘provide this foundation upon which, after consolidation, the equivalent of a European Visa or Mastercard can potentially be built”, said Aurore Lalucq, chair of the European parliament’s economic committee and a supporter of the project.
But Weimert warned that if geopolitical tensions were to deteriorate, the digital euro could arrive too late.
“The problem with the digital euro is it will come in a couple of years, maybe after the mandate of [US President] Donald Trump. So I think we are a little bit out of time,” she added.
https://www.ft.com/content/fcc215bb-b7b8-4a62-87ed-03f603eb3d14
