European Payments Initiative Looking To Topple US FinTechs

European Payment Initiative

The European Payments Initiative (EPI) is looking to create a payments firm that can take on some of the biggest U.S. FinTechs and payments companies, Financial Times (FT) reported on Monday (May 3).

“The idea is to build a European payment champion that can take on PayPal, Mastercard, Visa, Google and Apple,” Joachim Schmalzl, EPI chair, told FT. 

Some 30-plus banks and credit card processors in Europe are teaming up to topple what they see as an “oligopoly” dominated by the U.S.

Based in Brussels, the EPI comprises 40 payment experts — including Deutsche Bank, BNP Paribas, ING, UniCredit and Santander — and is working on developing a systematic plan for a pan-European payments service that can process payments online and at physical stores.

The project is backed by the European Commission and financial regulators and has received more than €30 million from its backers, according to Schmalzl, per FT. Schmalzl is also a board member of the country’s biggest retail banking group, German Savings Banks Association. 

The initiative is still researching a brand name for the payments organization. The EPI indicated that a system for electronic real-time payments between consumers could be rolled out next year.

Bundesbank board member Burkhard Balz told FT that Germany’s central bank supported the EPI, and said that a central payments coalition “would strengthen the strategic autonomy of the EU in the payments market, enhance competition and thus improve consumer choice.” 

European card payments are largely handled by U.S. firms, with four in five transactions processed by Mastercard and Visa, according to the retail lobby association EuroCommerce, per FT. 

“We want to offer an alternative to this oligopoly and give merchants and consumers in Europe a real choice,” Schmalzl said.

“Nobody [in Europe] on its own can compete with the U.S. credit card giants. That will be possible if we team up,” he added, per FT.

The French watchdog Autorite de la Concurrence said last week that the emergence of Big Tech platforms in the payments sector happened without the regulatory constraints that traditional banks must abide by.