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On the 2nd of February, five European payment providers signed a memorandum of understanding to build a pan-European interoperable payment system aimed at strengthening Europe's payment sovereignty and enabling seamless cross-border transactions by 2027. Initially, the network will cover 130 million users in 13 European countries, accounting for about 72% of the combined populations of the EU and Norway, allowing customers to use their existing payment apps across borders, and transfer money through a European system without relying on American companies like Visa or Mastercard.
So, in this video, we'll explain Europe's new digital payment network, how it aims to replace Visa and Mastercard, and whether it could work. If you love staying informed and want some of the best reporting on YouTube, then subscribe and ring the bell for more.
Let's start by explaining what payment providers, technically known as payment service providers or PSPs, actually do. When you make a transaction using your credit or debit card, you're basically sending money electronically from your bank account to the seller's bank account. But first, your transaction has to be facilitated by a payment service provider or PSP, which is a third-party company that acts as an intermediary between merchants and banks. PSPs essentially manage and streamline the entire transaction process, providing online gateways like checkout portals, as well as security measures, fraud protection, compliance with regulations, and other services like currency exchange. They also enable businesses to accept a wide range of payment methods, including credit cards, debit cards, bank transfers, or digital wallets via a single platform.
However, the issue for Europe is that the continent's existing PSP network is dominated by American services, namely Visa and Mastercard. Visa and Mastercard together process about 2/3 of all card transactions in the Eurozone, according to the European Central Bank, with a number of Eurozone members currently lacking a national alternative to the US providers. This means the fees from merchants, banks, and fintech terminals all essentially flow back to the US every time they process a transaction. Whilst at an individual level, these so-called interchange fees are tiny, often just fractions of a percent, at the continental level, they add up to billions of euros each year.
There's also an impact on European businesses, which have complained that the costs associated with payment processing act like a hidden tax on commerce because these fees are unavoidable and can be increased by PSPs despite the lack of competition. This particularly affects small and medium-sized businesses operating on tight margins, which is why you sometimes see small shops or market vendors in Europe say they don't accept Visa or Mastercard payments.
While the EU has been trying to nurture a European alternative for some time, progress has been slow, largely because Visa and Mastercard are protected by so-called network effects. In other words, everyone uses them because, well, everyone else already uses them, which makes them pretty convenient.
However, European efforts to derisk from the US in critical sectors have been galvanized in recent months by rising geopolitical tensions, which have at times veered into economic warfare, such as last month when US President Donald Trump threatened to impose additional tariffs on eight European countries that opposed his proposed annexation of Greenland. European officials are also becoming increasingly concerned that just as Visa and Mastercard suspended their operations in Russia after it invaded Ukraine, the US could weaponize its market dominance over the EU in the event of a serious breakdown in US-EU relations to extract concessions from the bloc.
So, we imagine it came as a welcome surprise in Brussels when earlier this month, four members of the European Payments Alliance – Spain's BEAM, Italy's Bankerat, Portugal's SIBS, and Norway's Vipps – signed an agreement with the pan-European European Payments Initiative or EPI to build a new European payment network by linking up their services under a central interoperability hub. This would allow customers to use their existing national payment apps in other countries and give businesses the option of processing transactions through a European payment provider rather than an American one. It will cover 13 countries at first, representing nearly 3/4 of the combined EU and Norwegian populations, with additional markets like Switzerland and non-Eurozone countries also able to join if they want. Countries with existing domestic payment providers will be able to join directly, while those without can adopt one of the payment providers already participating in the project.
The network aims to establish a central body to focus on building the technical foundations in the first half of this year, to begin rolling out cross-border payments later this year, and ultimately expand to e-commerce and in-person or point-of-sale transactions in 2027. This isn't an entirely new idea. The alliance itself was first established in December 2023, but has since expanded from just three members – Italy's Bancomat, Spain's BISOM, and Portugal's SIBS – to six now, including Norway's Vipps Mobile Pay, which also covers Denmark and Finland, Poland's Blik, and Greece's Dixi. This reflects widespread political and strategic support in Europe among both policymakers and consumers for more EU-wide initiatives to help decouple from America. Moreover, the idea is that participating services will use a shared branding logo alongside their existing identities, which could act as a sort of "made in Europe" label for financial transactions, encouraging users to choose European providers over American ones.
So, can this proposed pan-European payments network work? Well, although it won't be able to replace Visa or Mastercard entirely, given the two companies' global reach, there are some reasons for optimism. Firstly, unlike the dependencies in other areas like cloud computing, where the US has an even bigger market share with the US giants Amazon, Microsoft, and Google holding almost 70% of the European cloud computing market compared to just 2% for the EU's biggest provider, Europe already has the infrastructure and scale to build a sovereign payment system. The planned initiative uses existing national payment apps, which are already pretty popular in specific national markets, rather than forcing users onto an entirely new platform, which should make it easier for the new system to gradually erode the Visa-Mastercard duopoly.
Similarly, there also seems to be growing consumer demand for a European alternative. Since March 2025, when the European Payments Alliance launched its first instant cross-border transactions, more than €6 million euros has reportedly been transferred despite basically zero promotion or advertising, suggesting the new payments network could take off when it becomes operational in 2027.
However, the one big caveat here is that this could all be disrupted by the European Central Bank's plans for a digital euro, which, at least according to current proposals, will allow European businesses and consumers to transfer money directly between accounts held at the central bank itself, removing the need for any middlemen whatsoever. Of course, there's a lot yet to be worked out here, and who knows if the digital euro will actually end up happening. But it would be a bit ironic if, in an unprecedented case of Europe having too much strategic autonomy, one plan to reduce Europe's reliance on American finance were to negate another.
As is so often the case these days, a lot of how this plays out depends on influence. Not only who technically has the power to make things happen, but also who has the sway to make sure it does. That's why last year we put together a list of the world's 25 most influential people, using rankings from you, our audience, as well as from our journalists. This year, we've done the same, producing a brand new ranking for 2026.
In the upcoming issue of our magazine, Too Long, we explore our list, telling the stories of a number of people who made the list. From the return of Donald Trump and the calculated moves of Xi Jinping to the AI frontiers of Sam Altman, we look to the new entries: New York's first Muslim mayor, Zoran Mandani, the radical shift of Pope Leo XIV, and bastions of technocracy like Prime Minister Mark Carney, as well as the shadows that still linger like Jeffrey Epstein.
As always, this issue of Too Long features a whole lot more than just our most influential people ranking, though. We also have a whole featured segment on how the UK became more divided than ever, and how a broken country could rebuild; the fragmentation emerging within the EU; how religion is being used by politicians around the world; and much, much more.
You can pre-order your copy at tulong.news. Or, to get the best deal, you can just subscribe to the magazine. Doing so gets you 20% off every copy for the lifetime of your subscription. And if you use code spring26, you'll get an additional £3 off your first copy, bringing the price as low as £4.99. Find out more and order your copy today at tulong.news.