European Payment System Wero Set to Challenge Visa and Mastercard
Belgium, Friday, 6 September 2024.
Wero, a new European payment system backed by 16 banks, is launching in Belgium by July 2024. It aims to rival US giants by offering instant transfers using phone numbers and plans to expand services across Europe, addressing the need for faster, more accessible digital payments in the eurozone.
Background of Wero
Developed by the European Payments Initiative (EPI), Wero represents a significant step forward in Europe’s digital payment landscape. Formed in 2021 by 16 major European banks, EPI aims to create a unified digital payment service that can compete with established US giants such as Visa, Mastercard, PayPal, Apple, and Google Pay. Wero’s initial rollout in Germany has set the stage for its impending launch in Belgium by the end of July 2024, marking a crucial milestone in its expansion across the eurozone.
Features and Advantages
One standout feature of Wero is its ability to facilitate money transfers using only a phone number, eliminating the complexities typically associated with international transactions. Additionally, Wero boasts rapid transaction speeds, which are crucial for the instantaneous digital payments increasingly demanded by consumers. A spokesperson from KBC highlighted that Wero’s speed and ease of use offer significant advantages over traditional payment methods.
Addressing Eurozone Payment Needs
The eurozone, comprising 20 of the 27 EU member states, has long relied on international providers for electronic transactions. According to the European Central Bank, 13 out of 20 eurozone countries lack a national card scheme, resulting in 64% of electronically initiated transactions being handled by international providers. Wero aims to fill this gap by providing a homegrown alternative that can reduce dependency on non-European systems.
Future Enhancements
Looking ahead, Wero plans to introduce a range of new features in 2025 and 2026, including online payments to merchants, QR code invoicing, and buy now-pay later options. These enhancements are designed to cater to the evolving needs of both consumers and merchants, offering greater flexibility and convenience. Martina Weimert, CEO of EPI, emphasized that while Wero is starting with person-to-person transactions, the ultimate goal is to offer a comprehensive payment solution through a single digital wallet.
Integration and Expansion
Wero’s integration into the banking applications of 16 major European banks, including BNP Paribas, ING, and Société Générale, is set to take place in the second half of the year. Following the launches in Germany and Belgium, France is next in line to adopt Wero, with further expansion planned for the Netherlands. This phased rollout aims to ensure a smooth transition and robust adoption across various markets.
Potential Impact on the Market
The introduction of Wero could significantly diversify the European banking and payments ecosystem. By offering a competitive alternative to US-dominated systems, Wero has the potential to enhance consumer choice and drive innovation in the sector. As Anna Martin, a financial services policy officer at BEUC, notes, Wero’s features such as charge-back mechanisms and widespread usability within the eurozone can provide added security and convenience for consumers.
Conclusion
With the launch of Wero, the European Payments Initiative is poised to make a substantial impact on the digital payments landscape in Europe. By addressing the need for faster, more accessible digital payments and reducing reliance on international providers, Wero represents a significant step towards a more integrated and efficient European payment system.