EU Digital Wallets Take On Global Card Networks, Strive for Interoperability

Interoperability has long been a guiding principle for the European payments ecosystem.

A kind of mantra that has weathered the rollercoaster of European political (dis)integration, payment systems interoperability promises to deliver smoother cross-border trade and a more frictionless experience for consumers as they travel around the continent.

Helping to deliver on that promise, the European Mobile Payment Systems Association (EMPSA), consisting of 16 digital wallet providers, aims to foster collaboration between key European players in mobile payments and drive better integration between different systems.

Related news: BLIK Goes International With VIAMO Acquisition

These include Poland’s Blik, which recently acquired the Slovakian mobile transaction specialist VIAMO, pending regulatory approval.

In other consolidation news, PYMNTS reported last year that Denmark-based Danske Bank, which operates MobilePay, has reached an agreement with two other leading Nordic mobile wallets — Norway’s Vipps and Pivo in Finland — to merge their mobile payment services.

Related: Nordic Banks Strike Deal To Merge Three Mobile Payments Apps

One approved by competition authorities, the merged entity is slated to become the “strongest [bank-backed digital] wallet in Europe,” Vipps CEO Rune Garborg, told PYMNTS in an interview, serving 11 million users and over 330,000 merchants on the continent.

And while heavy investment costs and various national know your customer (KYC) and anti-money laundering (AML) rules might have complicated the process of connecting the existing digital wallets, progress is being made.

Also related: How Nordic Payments Megastructure Can Drive Greater Regional Integration, Harmonization

Just last month, the organization announced that it had successfully tested interoperability between BANCOMAT Pay, TWINT, and Bluecode payment services, based on the EMPSA specification it referred to as “Alpine cluster.”

Once the project is fully rolled out, the merchant networks of each mobile payment system will become integrated so that users of any of the participant wallets can make payments across Italy, Switzerland, Germany, and Austria, as if they were using the same wallet.

See also: Swish CEO: Nordic Consumers Demand Local Merchants Improve Mobile Commerce Experience

Ultimately, the plan is that the EMPSA specification will allow payments to be made across Europe using any of the involved mobile wallets.

What’s Wrong With NFC?

With all this talk of interoperability, users of near-field communication (NFC)-enabled wallets like Apple Pay or Google Wallet (formerly Google Pay), may well be wondering what all the fuss is about.

After all, NFC wallets already offer a convenient mobile payment method that is accepted by millions of merchants across Europe.

But to fully grasp the benefits of the EMPSA initiative, it’s helpful to dive into the fraught relationship Europe has with global card networks.

Learn more: SIBS CEO: EU Digital Wallet Interoperability Will Reduce Dependence on ‘Rigid’ Global Networks

Looking through the EMPSA website, the phrase “Europe-wide sovereign payment system” stands out. Especially in the context of the European Union (where all bar two EMPSA members are located), the deep roots of American card networks within the payment ecosystem have been perceived as a threat to European monetary sovereignty.

Watch Vipps CEO Interview: Intense Competition From Big Techs Keeps Nordic Payment Firms On Their Toes

While the E.U. can’t do much to extract Visa and Mastercard from the continent’s payments infrastructure, mobile wallets that facilitate transactions directly between banks can certainly diminish their importance and are often preferred by merchants due to lower fees.

Besides the political implications, this has a practical advantage for European consumers too.

As Christian Pirkner, CEO of Bluecode and EMPSA Chairman, told PYMNTS in an interview, QR-based mobile wallets create opportunities for value-added services that NFC wallets don’t.

“We’re basically doing what Amazon did 10 years ago in retail and in eCommerce — it’s a one-step checkout. You just show this code, and all the magic will happen in the back end,” Pirkner said.

And the more open infrastructure that EMPSA builds, the more users of digital wallets like Bluecode can link their loyalty card, employee card, and integrate various points and rewards schemes, creating real-time data flows between systems.

Meanwhile, recognizing that NFC is the “winning technology,” Dariusz Mazurkiewicz, the CEO of Polish digital wallet BLIK told PYMNTS that the company was integrating Mastercard NFC technology with an eye to global functionality.

Further reading: Polish Consumers Embrace Open Banking, BNPL Solutions

And ultimately, BLIK’s hybrid approach, which houses both account-to-account payment functionality and an NFC contactless method within a single app, may prove to be the most successful.

After all, even if EMPSA succeeds in creating a Europe-wide acceptance network, next to Visa’s 100 million+ international merchant network, Europe’s mobile wallets will still look provincial in comparison.

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