Europe Grapples with Dominance of US Card Networks
Europe faces a strategic "payments headache" as it seeks to develop homegrown payment alternatives while navigating the entrenched dominance of U.S.-based card networks. A recent report highlights the strategic imperative for European banks and regulators to build sovereign payment systems to balance data privacy and economic control.
- The European Payments Initiative (EPI) is actively developing "wero," a pan-European digital wallet and payment solution designed to function as an alternative to US-based networks. The service launched for person-to-person payments in Germany, France, and Belgium in 2024, with plans to expand to the Netherlands and other countries. - Wero is built on the SEPA Instant Credit Transfer scheme, enabling real-time account-to-account payments that settle within ten seconds, available 24/7. This infrastructure is a key part of Europe's strategy to modernize its payments landscape and reduce reliance on traditional card rails. - Visa and Mastercard currently handle nearly two-thirds of all card transactions in the Eurozone, and 13 EU countries lack a domestic card scheme alternative. In 2025, Visa held a 50.85% share of the European credit card market by purchase volume. - The wero rollout plan includes expanding from P2P payments to include online merchant payments in 2025 and point-of-sale payments in 2026. Future planned features include "Buy Now, Pay Later" (BNPL) options and the integration of merchant loyalty programs. - To accelerate its reach, the EPI has signed an agreement with the EuroPA alliance, a coalition of national payment systems. This collaboration aims to create an interoperable network covering approximately 130 million users by integrating established domestic systems like Spain's Bizum, Italy's Bancomat, and the Nordic's Vipps MobilePay. - The push for a sovereign European payment system is driven by concerns over data privacy, high transaction fees, and the geopolitical risk of relying on non-European infrastructure. The initiative is seen as a crucial step toward the EU's broader goal of "digital sovereignty." - Alongside private sector initiatives like EPI, the European Central Bank (ECB) is exploring a digital euro, a central bank digital currency (CBDC). While EPI's wero is a private solution, the digital euro would be public money, with both initiatives aiming to increase Europe's monetary autonomy. - The European payments market is projected to see significant growth, with the digital payment market expected to increase from USD 27.95 billion in 2024 to USD 131.03 billion by 2035. This growth is occurring alongside an increase in the volume of non-cash transactions, which is expected to surpass 600 billion by 2028.
