Modern economies run on payment infrastructure that most people never notice. Every tap of a card or phone triggers a complex system that connects banks, payment providers, and networks to move money securely in seconds.
The success of that system has created an unintended side effect. Over time, a small number of global networks have become the default route for most digital transactions across Europe. Their scale reflects decades of innovation, investment, and trust. But it also raises the question: if Europe wants a payments ecosystem with greater resilience and more choice, how can alternatives realistically emerge in a market defined by powerful network effects?

That question sits at the centre of the growing debate around payment sovereignty. The issue is not whether the current system works. It clearly does. It is whether Europe is doing enough to ensure its payments infrastructure evolves in line with its economic priorities and regulatory framework.

The structure behind everyday payments

Behind every transaction are fees and infrastructure processes that move money between banks and payment providers. 

The interchange fee, charged by the cardholder’s bank when a transaction is processed, is the most visible part of the overall cost. Merchants pay it as part of their total service fees, and over time, even small percentages add up to a significant expense.

European regulators acted on the market’s structural nature when they capped interchange fees for consumer cards in 2015. The UK retained equivalent caps after leaving the European Union. But the impact of those caps fell unevenly. Smaller issuers and acquirers, which depended heavily on interchange margin, absorbed most of the pressure. 

The major card networks adapted: having long diversified beyond interchange into scheme fees, tokenisation infrastructure, fraud services, data analytics, and cross-border processing, they were less exposed and in some cases responded by introducing entirely new fee categories.

This matters because it illustrates a broader point: addressing a visible fee does not necessarily change the underlying structure. The interchange cap was a meaningful intervention, but it did not reduce the market’s dependence on two dominant networks.

Whether the market structure provides sufficient competitive alternatives to ensure that pricing, access, and innovation evolve in the interests of consumers and the wider economy is the more important question.

Open banking’s unfinished promise

Europe has already taken significant steps to broaden the payments ecosystem.

The UK’s open banking initiative, mandated in 2016, created the regulatory foundation for account-to-account payments to emerge as a complement to card transactions. The underlying infrastructure is not new. The UK’s Faster Payments system has enabled instant bank transfers since 2008, and similar capabilities exist across Europe through SEPA Instant.

In theory, these rails could support a more direct payment experience between consumers and businesses without relying on card networks.

In practice, cards remain dominant, though this is less a natural market outcome than a structural one. The institutions responsible for implementing open banking infrastructure are largely the same ones that benefit from the status quo. Cards generate interchange income, float, cross-border fees, and data value that account-to-account payments would displace. When the incumbents are also the builders, the pace of change tends to reflect their interests.

Regulatory ambition has not always been matched by enforcement. PSD2 opened the door to open banking across Europe, but left the underlying infrastucture such as standardised APIs, reliable access, interoperability largely to banks to deliver on their own terms. A provisional agreement on PSD3 was reached in November 2025, with final texts published in April 2026 and stronger requirements for API performance and non-discriminatory access. Whether that produces a different outcome will depend on how firmly those standards are actually enforced.

Fragmentation also plays a role. The ecosystem has developed unevenly across markets, with different standards, interfaces, and approaches to fraud and dispute resolution. For institutions operating across borders, that fragmentation introduces complexity that established card infrastructure largely avoids – another structural advantage that persists because no one with the power to resolve it has been required to.

The lesson from international markets

If Europe wants to broaden its payments landscape, international experience offers useful lessons.

Brazil’s Pix system is often cited as a strong example of what coordinated policy can achieve. Rather than waiting for the market to gradually shift towards instant payments, the Central Bank of Brazil created a unified national infrastructure and required participation from financial institutions above a certain size. Common standards were enforced from the outset, and the system was designed as an open infrastructure that providers could build upon.

Crucially, the Central Bank also owned the rollout. Pix was launched as a nationally recognised brand and not handed to individual banks to market under their own names with their own messaging. A coordinated campaign introduced the system to the public in plain language. The result was that Pix entered public consciousness as a shared utility and not a product competing for attention among dozens of others. Within a few years, Pix reached more than 90% of Brazil’s adult population and now processes billions of transactions each month.

Brazil had previously attempted to develop a domestic card network through the Elo scheme. While Elo remains active, it did not achieve transformative scale when left to compete freely with established networks. The difference between the two initiatives was not technological capability but governance and policy design.

India’s Unified Payments Interface also established a national framework for instant account-to-account payments, supported by strong institutional coordination and integration with the domestic RuPay scheme. Participation requirements and shared infrastructure allowed the ecosystem to scale quickly and become a mainstream payment option.

The lesson from these examples is not that global networks should be replaced. Rather, it shows that new payment infrastructure rarely achieves widespread adoption without deliberate coordination across the financial system. This includes how it is presented to the public, not just how it is built.

Europe’s coordination challenge

Europe and the UK already possess much of the technical infrastructure required to support a broader payments ecosystem. Open banking regulation has created secure ways to initiate bank-to-bank payments. Financial institutions have deep expertise in digital payments and fraud management.

What is missing is the connective tissue that would turn these national assets into a coherent system operating at a continental scale.

The temptation has been to solve this through banking consortia. Wero, launched in July 2024, is the most visible recent attempt, a pan-European digital wallet and payment system that has reached 43 million users. But that figure should be evaluated in context. Bizum alone has 30 million users in Spain. BLIK in Poland processed 756 million transactions in Q1 2026. Europe already has successful national schemes; what it lacks is a way to connect them. Consortium-led initiatives tend to reflect the priorities and constraints of their founding members, which makes them a poor substitute for the kind of top-down coordination that produces interoperable infrastructure.

Achieving that would require several developments to occur together. Regulators need to align on common technical and legal frameworks so that account-to-account payments work seamlessly across borders. Financial institutions need clarity around participation expectations to prevent fragmented adoption. And a stable institutional body is required to maintain and evolve the infrastructure as it grows.

A long-term approach to resilience

The goal of payment sovereignty is resilience and choice, but that framing captures only part of the argument.

The stronger case is about what becomes possible, not just what gets protected. When payment rails are open and standardised, they become a platform that others can build on. Brazil is the clearest example: Pix and Open Finance together have enabled new credit models built on transaction data, brought informal workers into the formal financial system, and allowed fintechs to build financial services that would have been impossible on proprietary infrastructure. Once the infrastructure became shared, a wave of innovation followed.

The next generation of financial services, embedded, AI-assisted, and built around how people actually live, will be shaped by whoever controls the underlying infrastructure. Europe already has the technology, the regulatory expertise, and the financial foundations required. The question is whether there is sufficient coordination and long-term commitment to assemble them, not only to reduce dependency on global networks, but to ensure Europe has a stake in shaping what comes next.

Payment sovereignty, in that sense, is not about building walls around Europe’s payments system. It is about ensuring that the region has the capacity to shape its own financial infrastructure while remaining fully connected to the global economy.

Daniel Ruhman, Co-founder and CEO of Cumbuca