Wero: A New Payment System in Europe

Investing.com — The largest banks in the European Union are developing a new payment system called Wero that aims to provide customers an alternative to Visa and Mastercard.

This initiative, being rolled out across Western Europe, is supported by 16 major banks and payment processors, including BNP Paribas, Deutsche Bank, and Worldline. Wero allows users to make direct payments from their bank accounts, bypassing traditional card networks.

The implementation of Wero could result in significant losses for Visa and Mastercard, costing them billions in fees from European merchants. This initiative arises from Europe’s growing concerns over dependency on U.S. financial infrastructure, particularly after Visa and Mastercard suspended services in Russia following the invasion of Ukraine.

Martina Weimert, CEO of the European Payments Initiative behind Wero, highlighted that Visa and Mastercard’s dominance grants them considerable market power. Wero seeks to provide a “European choice” to compete with these international solutions.

Although Wero is backed by €500 million and has an existing customer base, it has a long journey ahead to compete against Visa and Mastercard, which collectively process trillions annually. Weimert described Wero as still in its startup phase, emphasizing the need for European nations to explore independent payment systems for financial sovereignty.

Various national payment systems have emerged in Europe, such as Sweden’s Swish, Switzerland’s Twint, and the Netherlands’ iDeal. However, none have achieved the influence of Visa and Mastercard. Wero aims to fill this gap, planning its services to be accessible via its app and participating banks.

Past efforts for a unified payment system in Europe, like the Monnet project, faced challenges, leading to a focus on account-to-account payments. Motivated by EU regulations for instant payments, Wero plans to expand into e-commerce and in-store payments.

The initiative addresses the need for payment sovereignty, which impacts both economic and political facets. With the euro utilized across 20 countries, Wero aims to streamline cross-border transactions for consumers reliant on U.S. solutions.

Visa and Mastercard processed approximately $14.8 trillion and $9 trillion in transactions last year, respectively, facing criticism for high transaction fees. Despite emerging alternatives globally, they view increased competition within Europe with cautious optimism, knowing the challenges in scaling new payment solutions effectively.