The EU's Quest for Payment Sovereignty: Breaking Free from Visa and Mastercard's Dominance
The European Union (EU) is on a mission to regain control over its financial infrastructure, particularly in the realm of payments. With billions of transactions occurring annually within the EU market, the bloc's heavy reliance on US-owned payment schemes has become a growing concern. In 2023, Visa and Mastercard processed a staggering 4.7 trillion USD in payment volume across the EU, highlighting the extent of Europe's dependence on these US-based giants.
A closer look reveals that 13 out of 21 eurozone member states still rely exclusively on international card schemes, with US card brands dominating the international segment by handling 61% of card transactions in the euro area. This dependency has sparked fears among the 450 million European citizens that they might be cut off from essential international financial services. The European Central Bank (ECB) has issued a stark warning, emphasizing the loss of control over monetary systems and the subsequent surrender of sovereignty.
To address this issue, the European Payment Initiative (EPI) launched WERO, a pan-European private-sector initiative, in 2024. WERO is a digital wallet and instant person-to-person (P2P) payments circuit, designed to be a fully-fledged alternative to US-payment networks by 2027. Ludovic Francesconi, Chief Member and Strategy Officer at EPI, emphasizes the importance of completing Europe's payment sovereignty architecture with a scalable European solution.
However, the path to competing with Visa and Mastercard is fraught with challenges. Judith Arnal, a senior researcher, highlights the key conditions WERO must meet: cost-effectiveness for merchants, convenience for consumers, security against fraud, and proper dispute resolution systems. She also advises against anti-US rhetoric, suggesting that the EU should focus on building its own alternatives alongside US systems.
The urgency of the situation is evident. Despite efforts to enhance European financial sovereignty, such as the Instant Payment Regulation (IPR) in 2024, the reliance on foreign payment schemes remains significant. In 2025, 47% of the eurozone's card payment value still passed through Visa and Mastercard. This overreliance is now seen as a strategic vulnerability, with strained EU-US relations raising concerns about the US weaponizing its payment circuits to exert pressure on the EU.
The EU has been working on a layered approach to build strong European alternatives without excluding non-European providers. This strategy combines EU-level policies and regulations to enable instant account-to-account (A2A) payments, private-sector efforts to create interoperable European wallets and networks, and the introduction of a digital euro to ensure the central bank's money remains usable in the digital economy. The EU's efforts include the 'European Banking Union' to address fragmentation and the SEPA instant payments law, which mandates instant credit transfers and instant payments.
The TIPS instant payment system, operated by the ECB, provides the infrastructure for real-time, 24/7 instant payments in central bank money. The Digital Euro project, first announced in 2020, aims to create a central bank-issued digital currency for everyday electronic payments. Cooperation with this project is considered crucial for regaining sovereignty.
However, the EU's strategic autonomy is at risk. Francesconi highlights the loss of control over consumer data, advertising opportunities, and growth limits. Without a pan-European solution, Europe's autonomy and leadership in commerce are compromised. The reliance on fragmented national payment solutions contributes to the fragmentation of the single market, potentially costing the EU up to €500 billion in annual GDP. WERO aims to address this by creating a scale effect, enabling innovation, competition, and efficiency at a continental level.
WERO's potential to strengthen European competitiveness is significant. By offering an alternative, it increases competition, enhances resilience, and provides more choices for banks and merchants. Healthy competition benefits consumers and the entire ecosystem. The ECB has also emphasized the rising costs of payments, with merchants in the eurozone spending approximately €3 billion annually in fees to accept debit card payments from foreign customers.
In conclusion, the EU's journey towards payment sovereignty is a complex and urgent endeavor. WERO represents a promising step, but it must overcome challenges to succeed. The EU's layered approach, including the Digital Euro and SEPA instant payments, provides a comprehensive strategy to regain control over financial infrastructure and ensure a more resilient and competitive European economy.
