The European Union (EU) is on a mission to break free from the dominance of Visa and Mastercard, but is it close to achieving this goal? With billions of transactions occurring annually within the EU market, the bloc's overreliance on US-owned payment systems has become a significant concern. In 2023, Visa and Mastercard processed a staggering 4.7 trillion USD in payment volume across the EU. Shockingly, 13 out of 21 eurozone member states still rely solely on international card schemes, with US card brands controlling 61% of euro-area card transactions. This heavy dependence on US-financial systems has put Europe's economic sovereignty at risk, as highlighted by the European Central Bank (ECB).
The ECB's warning, "If we lose control of our money, we lose control of our economic destiny. And we surrender a key attribute of sovereignty," underscores the urgency of the situation. While EU institutions have not yet officially endorsed any initiatives, the European Commission and the European Parliament (EP) have shown support for WERO, a pan-European private-sector project aiming to enhance Europe's payments sovereignty. Launched in Germany in 2024, WERO is the first digital wallet and insta-person-to-person (P2P) payments circuit "made in Europe."
WERO's founder, European Payment Initiative (EPI), aims to make it a fully-fledged alternative to US-payment networks by 2027. Ludovic Francesconi, Chief Member and Strategy Officer at EPI, emphasizes, "WERO is about completing the architecture of Europe’s payment sovereignty with a scalable European alternative." But how close is WERO to challenging the giants Visa and Mastercard?
Judith Arnal, a senior researcher at the Centre for European Policy Studies and Elcano Royal Institute, acknowledges the promise of WERO but also highlights the challenges. She states, "It must meet key conditions to compete with Visa and Mastercard. It must be cost-effective for merchants, convenient for consumers, secure against fraud, and offer proper dispute resolution systems." Arnal also cautions against anti-US rhetoric, suggesting that the EU should focus on building its own alternatives alongside US systems.
The clock is ticking for the EU to achieve financial independence. Despite efforts like the Instant Payment Regulation (IPR) in 2024, the reliance on foreign payment schemes remains high, with 47% of eurozone card payment value passing through Visa and Mastercard in 2025. This dependence is seen as a strategic vulnerability, especially with strained EU-US relations. Francesconi notes, "the urge and need for concrete actions started about seven to eight years ago, as international alliances started to shift and people took more interest in where our dependencies lay."
The EU has been working on various initiatives to enhance its financial sovereignty. The EU proposed a "European Banking Union" in 2012 to address fragmentation, aiming to centralize banking supervision and ensure the stability of European banks. The SEPA instant payments law, which entered into force in April 2024, mandates eurozone banks to offer instant credit transfers at the same price as standard transfers. The TIPS instant payment system, operational since 2018, enables real-time, 24/7 instant payments in central bank money.
The Digital Euro, first announced in 2020, is another highly anticipated initiative that would create central bank-issued digital cash for everyday electronic payments. Francesconi emphasizes the importance of cooperation with the Digital Euro project, stating, "We will be able and are open to discuss the best ways to include digital euro in our wallet." He believes that a public-private partnership approach is key to regaining sovereignty and driving such ambitions to reality.
However, the EU's efforts to regain strategic autonomy face challenges. Francesconi highlights the economic loss, stating, "the biggest economic loss is not only financial — it is strategic — we are talking here of control over consumer data, advertising opportunities, growth limits, etc. Without a pan-European solution, Europe lacks a useful layer for its autonomy and leadership for commerce on its own territory." The non-interoperability of fragmented national payment solutions contributes to the fragmentation of the single market, undermining the EU's economic competitiveness. This fragmentation may cost the EU up to €500 billion in annual GDP.
WERO, with its focus on interoperability and brand recognition across borders, aims to create a scale effect, enabling innovation, competition, and efficiency at a continental level. By offering an alternative to foreign schemes, WERO has the potential to strengthen European competitiveness and provide consumers and merchants with more choices. As Francesconi concludes, "A strong European solution increases competition, strengthens resilience, and gives banks and merchants more choice. Healthy competition benefits consumers and the ecosystem as a whole."
In conclusion, while the EU has made significant strides in enhancing its financial sovereignty, the journey towards complete independence is far from over. WERO, as a promising private-sector initiative, holds the potential to play a pivotal role in this endeavor. However, the challenges are real, and the EU must continue to innovate and collaborate to ensure a more secure and sovereign financial future for its citizens.
