A EuroCard??

10 Jun

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.

One Response to “A EuroCard??”

  1. Kill the American Monopoly June 10, 2021 at 3:48 pm #

    Interesting you lump Apple Pay in with Visa and MasterCard, I thought that behind the scenes you were still charging your Visa or MasterCard accounts. That is the way it appears to work with Android Pay. (Which you did not mention)

    I am not sure Visa and MasterCard are as powerful as you make out. Retailers don’t subscribe to a service provided by Visa or MasterCard, but a service provided by an intermediary. For instance selling on the web you can use a company called Stripe. It is Stripe and the card machine providers who have to be pursuaded to support this initiative. Once that is done the selling is transparent and all retailers will be able to use the European payment method.

    Again the user of the card does not connect with Visa or MasterCard, but contracts with the bank. As banks are running this they can easily give out cards to all their existing Visa an MC customers.

    I see adding the European payment method to Android Pay and Apple Pay as part of the same process.

    The American monopoly on money must be broken.

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