The European Central Bank (ECB) President Christine Lagarde has recently called for Europe to break its dependence on American payment networks, notably Visa and Mastercard. Not surprisingly, the call for “European Strategic Autonomy” has resonated with many European nations. Mario Draghi, the former ECB president, had earlier warned that “deep integration created dependencies that could be weaponized when not all partners were allies”. A clear reflection of the times we live in where friends and allies are no longer ‘dependable’.

Analysts believe that the accelerated new initiative is a response of a nervous Europe to the punitive tariff regime emanating from the US. There is no way to tell. But the ball is already set rolling.’

Christine Lagarde’s call was followed by the European Payment Initiative (EPI) signing a deal with EuroPA Alliance to build an inter-operable payment system that will seamlessly enable cross-border payments by 2027.

Besides strengthening Europe’s payment sovereignty, this home-grown solution will enable approximately 130 million users from 13 countries to use their existing payment apps across borders while providing merchants with expanded access.

At the core of the deal will be a central interoperability hub operated by a jointly established entity. This hub will function as a technical layer that connects existing payment systems, allowing transactions to flow seamlessly across borders using European standards and instant account-to-account payment infrastructures.

As of early 2026, analysts estimate that Europe accounts for roughly 20-25% of Visa's revenue and nearly 30% of Mastercard's. A successful European alternative could put billions of dollars of annual revenue at risk over the next decade. (FT)

Visa holds ~64% and Mastercard ~30% of global purchase volume, with Europe being the primary battleground for Mastercard's growth (Semantic Scholar, 2021). Mastercard’s 13.4% CAGR vs. Visa's 7.8% highlights Mastercard's deeper penetration and vulnerability in European growth markets (Semantic Scholar, 2021).

The new initiative by EPI and EuroPA, built on “Account-to-Account” (A2A) rails will completely bypass these card networks. This will not only impact transaction volume but also high margin fees from international transactions.

Merchants in Europe currently pay between 0.2% to 2.0% per transaction to use US card networks. Because Wero & Digi Euro systems are bank-owned or state-backed, they aim for near-zero or significantly lower merchant fees, which could force Visa and Mastercard to slash their own prices to stay competitive. It is expected that the Digital Euro / sovereign network could lead to $127 billion loss in market capitalization for US payment firms due to expected "rent" drops (ECB, 2023).

Pundits may differ on whether these initiatives will adversely impact US payment networks. In a continuously challenging environment, the European initiative is the latest. The emergence of central bank issued digital currency (CBDC) together with powerful global alternative payment networks like UPI, Alipay, WeChatPay etc., poses serious challenges to the very business model of Visa and Mastercard.

But there are larger questions about Europe’s ability to execute such a massive and complex project. Will they be successful now? They had launched Project Monnet in 2008 that wound up in 2012. This was largely because of fragmentation. Each EU country developed its own payment solutions but posed a massive challenge in integrating these diverse solutions into a unified network.

But the highly charged trans-Atlantic relations appear to catalyze a unified interoperable network that will benefit European customers.

The reality is that consumers and merchants across the globe now have very attractive alternatives. Given the strained global trade environment, nations will continue to build sovereign networks and try to insulate themselves from weaponization of every segment of international trade. This move by Europe will reduce or negate mutual dependencies which was once the bedrock of a globalized trade architecture.

The question is no longer whether Europe wants its own payment infrastructure. It is whether it can execute fast enough to matter. As Lagarde put it: “We have the assets and opportunities to do that ourselves. And if we were to remove the internal barriers that we have set for ourselves in Europe, our economic wealth would increase significantly.”