I see from yesterday’s Financial Times that a group of European banks planned to take on what they call the US payments oligopoly (https://on.ft.com/3wep8ab).
The number of European banks involved is impressive, and doubtless, with the rise of contactless payments, they have their eyes on the profit pools available in global payments. They also declare themselves worried by the ability of the US to ‘switch off’ European payments – perhaps if the Europeans fail to increase their defence spending? There is much talk of plans and blueprints, and they have even stumped up (not very much) money – €30m between 30 of them seems a bit mean.
I doubt if Visa and MasterCard – or even Apple Pay – are quaking in their boots at this prospect. As well as a 50 year lead time on the European venture (Visa was opened to banks other than Bank of America, its founder, in 1966), they will also take comfort from the failure of a group of US retailers, including Walmart, to launch their own credit card system, MCX (see logo above and https://bit.ly/3izjICC). How a new venture accesses the consumer history to prevent fraud will be a major issue.
Aside from that, they will need to break the chicken and egg problem – how do you get retailers to accept a card few consumers carry? How do you persuade customers to take out a card not accepted by retailers? Visa and MasterCard’s answer was a massive, costly TV advertising campaign. Today of course European banks would have an additional problem – why would I as a consumer switch from widely-accepted cards that work to the new system?
Standby for the crocodile tears of failure in a couple of years’ time.
gleedsaling 