European payments groups join forces to challenge US dominance

European Payment Providers Form Network to Challenge US Market Leaders

European Payment Groups Unite to Enhance Payment Sovereignty

By Jesús Aguado, Elizabeth Howcroft and Valentina Za

Formation of the European Network for Payments

MADRID/PARIS/MILAN, Sept 30 (Reuters) - European payment groups serving 130 million people, including Spain's Bizum, Italy's Bancomat and Brussels-based Wero, said on Wednesday they were joining forces to create a cross-border payments network as Europe seeks to curb its dependence on Visa and Mastercard.

The companies will form a new joint venture, the European Network for Payments, which will be based in Madrid and connect national payment systems.

Background and Motivation

European policymakers have made payments sovereignty a priority as a fragmenting global order raises concerns over access to critical payments systems.

Key Participants and Coverage

ENP's founders are Bancomat, Bizum, EPI Company/Wero, SIBS-MB WAY and Vipps MobilePay, which together serve around 130 million users across 13 European countries, covering more than 70% of the population of the EU and Norway.

Technical and Operational Framework

The network will connect existing payment systems through a common technical and operational layer based on European standards and instant account-to-account payments.

Integration with Digital Euro

The payments group said European Central Bank plans for a digital euro by 2029, essentially an online wallet guaranteed by the ECB but operated by private companies including banks, could eventually complement their project.

Challenges and Future Prospects

Overcoming Fragmentation

Fragmentation has long been the "biggest hurdle" for European payment schemes, said Martina Weimert, CEO of the European Payments Initiative.

Leadership and Staffing

Fernando Rodriguez, deputy general manager for international expansion at Bizum, said ENP had already selected a new CEO and was planning to recruit staff.

Financial Considerations

Shareholders will need to absorb operating costs in the early years as the company builds infrastructure to achieve sufficient scale to generate its own fees, Weimert said.

Expansion and Rollout Plans

Other European payment schemes could join in the future, the companies said, adding that a phased rollout will begin with cross-border person-to-person payments, followed by e-commerce and point-of-sale transactions.

Implications for EU Payment Sovereignty

Connecting Existing Systems

"The creation of the European Network for Payments reflects a growing focus on connecting the payment systems Europeans already use, rather than replacing them," said Marcel Hörauf, a partner at law firm Mayer Brown.

Regulatory and Political Considerations

Hörauf said that whether this will translate into meaningful EU payment sovereignty depends on how Europe's payment regulations develop, whether it gets accepted by merchants and whether it has political support from EU member states. 

Reporting and Editorial Credits

(Reporting by Jesús Aguado in Madrid, Elizabeth Howcroft in Paris and Valentina Za in Milan; Editing by Alexander Smith and Elaine Hardcastle)