As the results of the June European elections are starting to unfold, the impending changes in the European Commission (EC) and Parliament are poised to influence the payments industry once again. Over the past few years, the EC has undertaken substantial initiatives to reform the retail payment landscape. This has led to the proliferation of fintech firms and the development of new payment solutions that have made the market more diverse and transactions more secure for consumers.
Indeed, the publication of the EC’s Retail Payments Strategy in 2020, the first-ever European policy roadmap for payments, gave rise to a wide-ranging legislative reform aimed at encouraging greater diversification and digitalisation. At the same time, and even more importantly, the reform was fuelled by the political desire to create a more autonomous payments market with European champions, less dependent on international card schemes and Big Tech.
‘The problem is not inside Europe, the problem is outside Europe. […] 69% of the market is in the hands of somebody else. We should stop fighting among us and think where the real problems are.’ – Piero Cipollone, European Central Bank, 2024
The politicisation of the payments policy led to several government initiatives, such as the promotion of instant payments, the initiation of a digital euro, support for pan-European payment solutions like the European Payments Initiative (EPI), and broader initiatives such as a European e-wallet. Europe’s geopolitical ambition is also backed by competition policies, such as the anti-trust actions against Apple Pay. The role of subsidies, foreign direct investments (FDIs), or merger control to create European champions has also been at the centre of the sovereignty debate.
As geopolitical volatility only increased, the intersection of payments and politics is more pronounced than ever, and the reshuffling of the political cards is expected to impact the future of payments in the EU. Across Europe, we witnessed a political shift to the right, with far-right parties – although not being united – gaining votes. Despite that, the political centre in Europe still holds. Conservative, liberal, and socialist parties still form the majority – and will be able to drive the political agenda for the next five years in Europe. These mainstream political parties continue to support the development of a robust European payment infrastructure as a means to enhance Europe’s competitiveness and sovereignty versus other parts of the world. The continuation of the Retail Payments Strategy and other related legislative initiatives is expected to remain a priority, especially in terms of implementation. This is indicative of a broader political will to strengthen the EU's internal market and reduce dependency on external players. Indeed, the political objective remains clear: the EU aims to foster homegrown champions capable of competing on a global scale.
Under the new political leadership, the digital euro project is expected to stay at the forefront. By providing a digital counterpart to cash, the digital euro aims to ensure central bank monetary control and give EU citizens access to a means of payment that is not reliant on foreign providers. However, the rise of far-right political parties, especially at the national level e.g. in France and Germany, poses a potential threat to the European Commission's cohesive strategy. These parties often prioritise national interests over collective European goals, which could fragment the unified approach necessary for projects like the digital euro and pan-European payment solutions initiatives like the EPI.
In addition to the digital euro, in the next few months, the discussions regarding the Payment Services Directive (PSD2) review with the PSD3 and PSR will continue. Key areas of focus include improving consumer protection, fraud liability, enhancing security measures, and fostering further innovation.
While these initiatives will be pushed forward, there is a general call by the industry to introduce some form of regulatory pause. The rapid pace of regulatory changes has imposed significant compliance burdens on the payment industry. A temporary slowdown would allow the industry to adapt to the current regulatory framework and innovate within these parameters before introducing new regulations. ‘Implementation’ may thus become a new buzzword in Brussels.
European voters have reshuffled the political landscape for the next five years. A new political elite will soon arrive in Brussels, aiming to pursue its ambitious political agenda under pressure from the far right and under tight management of the deep state. As time unfolds, the exact priorities for the payments market will become clearer. One thing, however, is already evident: the payments industry stands, once again, at a crossroads, with political dynamics and regulatory strategies set to shape its future. As the EU navigates these changes, the commitment to fostering a secure, efficient, and sovereign payments landscape remains steadfast.
Robrecht is a Senior Managing Director at FTI Consulting in Brussels, overseeing a wide range of payments and financial technology clients. He helps them understand and manage complex EU policy and legislative issues that will impact their business, as well as advise them on broader political reputation management to grow or protect their freedom to operate. Robrecht is a member of the European Commission Payment Systems Expert Group, which advises the European Commission on payments policy and legislation. He is also Secretary General of Payments Europe, the association that represents the European and global digital payments industry.
Maxence is a Consultant at FTI Consulting in Brussels and focuses on financial services-related policy and its interlinkage with technological solutions. He has strong experience in regulation relating to digital payments and digital finance. Prior to joining FTI, Maxence worked for three years for a European trade association in the payments industry, where he supported the association's growth and public relations efforts across the EU.
FTI Consulting is a global business advisory firm providing multidisciplinary solutions to complex challenges. It has a worldwide network of over 6,600 employees across 29 countries spanning six continents. FTI Strategic Communications helps companies around the world manage change, mitigate risk, and enhance their market position.
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