The European card payments market, processing trillions of euros each year, remains dominated by two American giants: Visa and Mastercard.
Despite the sector’s importance to modern commerce, competition has struggled to flourish, leaving Europe without payments sovereignty and heavily reliant on US-based financial infrastructure.
With Visa and Mastercard jointly handling over €7 trillion in European transactions in 2023 alone, their entrenched position shows no signs of waning — sparking regulatory concerns and urgent calls for homegrown alternatives.
Depth of Control
The depth of their control is stark.
In the UK, Visa and Mastercard account for 95% of all card transactions.
Across the broader European market — defined expansively by the networks themselves — Visa reported a 2023 payment volume of $2.4 trillion, closely matched by Mastercard’s $2.3 trillion.
According to the European Central Bank (ECB), card payments constituted 56% of all cashless transactions in the EU in 2024, further underlining the card schemes’ centrality.
Alternative Networks
Efforts to establish alternative networks have been hampered by Europe’s fragmented financial landscape.
Domestic systems like France’s Carte Bancaire and Germany’s Girocard have succeeded nationally but lack European-wide reach.
Previous initiatives, including the Monnet Project and PayFair, failed to overcome cross-border regulatory complexities and network effects that naturally favour incumbents.
Meanwhile, fintechs and neobanks continue to depend on Visa and Mastercard to issue payment cards, reinforcing the duopoly’s dominance.
The barriers to entry are formidable
Building a rival network requires massive capital outlays, complex regulatory compliance, and the painstaking cultivation of consumer and merchant trust.
The European Payments Initiative (EPI) — a consortium of major European banks — has projected investments of several billion euros will be necessary to launch a sustainable alternative.
Network effects compound these challenges: consumers prefer cards that are universally accepted, while merchants prioritise acceptance of cards most in demand by customers.
Breaking this cycle requires more than a competitive product; it demands coordinated, Europe-wide adoption.
The Cost Competition
The cost of limited competition is tangible.
Since 2017, card processing fees have risen by at least 25% above inflation. Following Brexit, Mastercard quintupled cross-border interchange fees between the UK and EU.
These increases, merchants argue, are not justified by corresponding security or technology improvements but are instead fuelling soaring profits.
Visa’s operating margin exceeds 60%, and both companies have posted near-tripled earnings since 2018.
Meanwhile, real innovation in payments is emerging from fintech players offering real-time payments and digital wallets, not from the card giants themselves.
Regulatory interventions have made only incremental progress.
The EU’s 2015 Interchange Fee Regulation capped interchange rates but left broader scheme fees untouched.
PSD2 and Open Banking initiatives aimed to stimulate competition but have seen limited uptake; by 2022, only around 2% of digital consumers in key European markets had engaged with Open Banking solutions, according to PwC.
European payments sovereignty
However, momentum may finally be shifting.
The Payment Systems Regulator (PSR) in the UK is investigating Visa and Mastercard’s fee structures, while the European Commission is examining potential anti-competitive practices.
Broader legislative frameworks, such as the Digital Markets Act, could impose stricter oversight. The ECB, too, is exploring a digital euro to offer an alternative infrastructure.
The European Payments Initiative stands at the forefront of these sovereignty efforts.
Its new payment platform, Wero, promises to deliver an instant, multi-channel payment solution across Europe.
Already functional for P2P and P2Pro payments with over 40 million users, Wero will launch e-commerce capabilities in Germany and Belgium from summer 2025, followed by France and the Netherlands.
By 2026, Wero aims to support omni-channel payments, POS transactions, and invoice payments through QR codes and European NFC standards.
Wero is managed by European institutions and open to new partners, providing an inclusive model to counter US dominance.
BNP Paribas COO Thierry Laborde has framed the initiative starkly: “Sovereignty in payments is no longer a future ambition, it is a European necessity.”
Yet EPI recognises that success will not come from one solution alone.
Other localised digital payment schemes already serve over 120 million European customers. Collaboration, not competition, among domestic initiatives will be crucial to achieving scale and cross-border functionality.
As ECB Chief Economist Philip Lane warns, Europe’s dependence on foreign payment systems poses strategic risks. The time for European cooperation in payments has never been more urgent.