Every consumer in Europe can pay and transfer money, but that doesn’t mean that all needs are met. The payment market is dominated by several global players, with only a few successful domestic brands challenging them locally. With wero, we aim to position ourselves as a European local solution that offers all the benefits of global players, tailored specifically to European needs. For banks, this represents a shared investment and an opportunity to position the bank account for everyday payments in all situations.
Wero is not only an account-to-account (A2A) solution but also a full payment scheme to enable, in addition to a payment wallet, rich payment functionalities for P2P, online, and in-store payments directly from your bank account with a single brand.
The idea that banks as latecomers can still compete in the market has already been proven. For example, in the US, Zelle was late to the market, however, it outgrew the dominant solutions rapidly. By leveraging their client reach, Zelle overtook Venmo, which had previously dominated the P2P market. Similarly, in Europe, Switzerland’s Twint – a solution from local banks – has also become very successful.
EPI is currently backed by 16 European financial institutions and merchant service providers, representing the majority of those on the issuing and acquiring side in our starting countries. We are currently in talks to extend this round with additional scheme members on both sides
EPI aims to build a mobile wallet-based payment solution tailored for Europe, leveraging the instant A2A payments infrastructure available in the region. We will launch it in the summer of 2024 in Germany, quickly followed by Belgium and France. We start with person-to-person (P2P) payments and plan to move to online and mobile shopping payments, and then point-of-sale payments. In the future, we will also include value-added services like instant financing and merchant loyalty programmes.
European regulations, particularly the upcoming PSD3 directive, are driving the industry to move beyond Open Banking towards Open Finance. They also improve and harmonise customer protection and fraud prevention. This shift emphasises the need for effective consent management for both payments and data, and these changes are expected to increase the prevalence and acceptance of A2A payments by ensuring security, efficiency, and consumer control.
The most common types of A2A payments include instant payments and traditional bank transfers. These payments are used for various purposes such as P2P transactions, business-to-consumer (B2C) payments, and increasingly for online and mobile shopping. However, pure push payments are not convenient enough to get broad traction. This is why we need to improve pure bank payments with rules and functionalities that bring A2A payments on par or above with other card and existing wallet payments. The beauty of A2A payments is that they can be evolved for any use case.
Recurring payments have evolved significantly with the rise of subscription-based business models and the increased demand for automated billing solutions. As business models improve, recurring payments beyond the classic subscription business are increasingly required (VAR). However, their further occurrence is impeded by legacy systems, which are often not equipped to handle modern digital transaction requirements seamlessly, securely, and in a user-friendly way. Challenges include the need for more sophisticated consent management and integration with new digital payment infrastructures.
Consent-based payments are a key focus for EPI. This token-based model offers superior flexibility, security, and user control compared to traditional methods. EPI’s consent-based model aims to empower consumers by giving them greater control over their payment information and transaction details, fostering trust and encouraging wider adoption.
The consent-based architecture also provides the merchant with all the necessary advanced transaction types that they would need for their business model (e.g., with guaranteed, customer-absent, and recurring payments). Additionally, it enables EPI to offer a broader range of services with the same functioning.
The wero digital wallet, our consumer-facing brand and payment option, empowers consumers by giving them greater control over their payments. wero enhances the user experience with seamless transactions – and will spread across all kinds of retail use cases in the future.
This editorial piece was first published in The Paypers' Unlocking the Potential of A2A Payments Report 2024 – Changing the Way We Pay and Get Paid, which taps into the fast, ever-expanding A2A payments industry, being the ultimate source of information for businesses looking to grow their consumer base.
Fabian Mansfeld is part of the leadership team of the European Payment Initiative (EPI) and is responsible for developing the acceptance market strategy, partner management, and pricing. His collaboration with EPI began in July 2020 as a shareholder and was directly involved as Managing Director in the Cash Management Strategy Office of Deutsche Bank. Subsequently, he supported EPI directly in product development, ecommerce, and market positioning. Before EPI, Fabian Mansfeld held senior positions at companies such as Zalando and Sixt, focused on payment transactions and other operational functions. Additionally, he has worked as a consultant focusing on payment transactions, supporting various companies in the financial services, insurance, ecommerce sectors, and the mobility and automotive industries.
The European Payments Initiative (EPI) is an initiative backed by 16 European banks and merchant service providers to progressively build a payment solution tailored for Europe. EPI leverages the instant A2A payments infrastructure available in Europe to improve efficiency and remove intermediaries in the payment flow. It aims to enable next-generation payments for consumers and merchants in Europe across all retail transactions via a wallet.
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