Less Wero, More PayPal Usage
Europe Urged to Break Digital Dependence on US, Bolster Homegrown Payment Systems
Amidst escalating global tensions, Tanja Müller-Ziegler, a board member at the National Association of German Cooperative Banks (BVR), has called for Europe to free itself from its extensive reliance on American digital payment providers. Delivering her remarks at the 23rd Retail Banking Day organized by Börsen-Zeitung, she underscored the necessity for Europe to develop and execute self-sufficient digital payment solutions.
"The question is no longer if Europe can create its own solutions, but whether we possess the resolve and political will to implement them," said Müller-Ziegler.
Non-European entities maintain a dominant presence in the continent, particularly in cross-border payments. US firms like PayPal, Visa, and Mastercard are prominent players influencing the market. According to the Bundesbank, international card systems handle around two-thirds of all payments in the eurozone. Müller-Ziegler attributes Europe's trailing position behind the United States to fragmentation and bilateral approaches.
Müller-Ziegler emphasized the risk of payment services becoming inoperable due to international conflicts or sanctions. "If payment services fail, the real economy grinds to a halt. If payment flows are controlled, dependencies emerge – economically, politically, and geopolitically," she said. Moreover, the use of US infrastructure in payments could expose Europeans' data to US authorities.
Europeans could devise national solutions such as the Girocard, but these typically stop at national borders, Müller-Ziegler pointed out. "It's unacceptable that someone cannot use their Girocard at a Brussels petrol station while US cards work without issue everywhere," she added. To rectify this, European nations must advance in technical, political, and regulatory aspects. This might include harmonized technical and regulatory standards.
The European Payments Initiative (EPI) with its payment method Wero might offer potential competition to established players like PayPal, Apple Pay, and Google Pay if appropriately supported and marketed. Müller-Ziegler expressed reservations about the digital euro, a concept that has faced skepticism in the financial sector. While the digital euro could be a resilience-building block, it should not replace existing systems.
Enrichment Data:- The European Central Bank is proactively advancing the digital euro project, aiming to provide a central bank digital currency (CBDC) for everyday payments across the EU. This CBDC would serve as a secure, efficient, and sovereign alternative to private payment systems dominated by non-European companies.- The EU is refining regulation and infrastructure harmonization through initiatives like PSD3, PSR, and FiDA, which streamline licensing, enhance open banking, strengthen consumer protection, and improve the SEPA Instant Credit Transfer scheme. These reforms are critical to creating a unified European payment area independent of US providers.- Fostering collaboration between public and private sector stakeholders, as demonstrated by the ECB’s innovation platform, accelerates innovation, builds scalable solutions, and bolsters adoption across the digital euro payment ecosystem.- Cross-border European Digital Identity (eID) wallets are being developed to securely verify identities online and offline, potentially integrating with digital payment solutions to streamline authentication, boost security, and establish trust in European digital commerce and payment services.- Open finance principles, by empowering users to own and control their financial data, intend to stimulate competition and innovation in the payment and financial services landscape, enabling other regulated third-party providers to offer a diverse array of payment options beyond traditional card networks.
"The need for Europe to develop its own self-sufficient digital payment solutions in the realm of finance and technology, as urged by Tanja Müller-Ziegler, is underscored by the continent's overreliance on American digital payment providers in cross-border transactions, such as PayPal, Visa, and Mastercard."
"To mitigate the risks associated with payment services becoming inoperable due to international conflicts or sanctions and to lessen dependencies on US infrastructure, Europeans are exploring alternatives like the European Payments Initiative (EPI) with its payment method Wero, harmonized technical and regulatory standards, and the digital euro project as resilience-building blocks, while ensuring they do not replace existing systems."
