Following this announcement, officials from the European Central Bank have mentioned that Europe needs to focus on developing its own payment system in order to secure financial sovereignty, as a fully unified capital market could provide a deeper fiscal integration and potentially generate up to EUR 3 trillion in added value annually.
In addition, they also expressed the need for Europe to ease its dependence on American and Chinese platforms like Visa, Mastercard, PayPal, and Alipay, with an emphasis on the EU’s reliance on foreign digital payment infrastructure.
The initiative comes in the context of EU’s broader plans to develop a secure and efficient single capital market across member states. This move is aimed at boosting the overall investment landscape, as well as optimising access to financing for companies and businesses. This process will also focus on improving the manner in which citizens save more efficiently.
In addition, officials of the institution also mentioned the need for the EU to strengthen its overall control over digital payments and provide businesses and citizens with alternatives that are independent of the US and China.
However, the process of designing a European alternative to Visa and Mastercard faces multiple serious challenges. This includes the US trade situation, as President Trump has recently imposed large-scale tariffs on imported goods against several countries around the world. The EU and China have already immediately threatened the US with multiple countermeasures. Other difficulties include low interchange fees that make it challenging to achieve profitability, adoption hurdles (such as changing customer and merchant behaviour or the process of convincing banks to support a new system), technical complexity, governance and coordination, as well as the significant initial investment that is required to develop an infrastructure capable of competing with global players.
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