The Sovereignty Illusion: Why Europe Can't Buy Its Way Out of Visa and Mastercard
Every few months, someone senior in European finance says something urgent about payment sovereignty. The latest is the CEO of the European Payments Initiative calling in the Financial Times for European alternatives to Visa and Mastercard. The European Central Bank echoes the concern. Politicians nod. A new acronym is funded. The conversation moves forward.
Except it doesn't. It moves sideways. And it has been moving sideways for over a decade.
Having spent 27 years inside SIBS — Portugal's national payment processor and one of the institutions I describe in this piece — I can tell you that the problem isn't technology, capability, or even political will. The problem is that everyone discussing European payment sovereignty is carefully avoiding the room's largest elephant: the people tasked with building the alternative are the same people profiting from the status quo.
The numbers behind the dependency
Before discussing solutions, it's worth understanding what's actually at stake.
Visa and Mastercard collectively process over €7 trillion in European payments annually. They account for roughly two-thirds of all card transactions in the Eurozone. Thirteen EU member states have no domestic card scheme at all — every electronic payment in those countries flows through American infrastructure.
This isn't a recent development. It's five decades of compound network effects. Every card issued, every terminal deployed, every merchant onboarded, every cross-border acceptance agreement — each one reinforced the network that made the next one easier. The result is an infrastructure so deeply embedded in European commerce that most people interact with it multiple times daily without ever thinking about who operates it.
The European Payments Initiative, backed by 16 major European banks, launched Wero in 2024 with approximately €500 million in backing. Wero has reached nearly 49 million users across Belgium, France and Germany. The EPI and the EuroPA Alliance — which includes Portugal's MB WAY — signed an agreement to build interoperability across 13 countries.
These are real achievements. They are also insufficient to address the structural problem.
The conflict of interest that remains unnamed
Here is the observation that rarely appears in the conference presentations.
In a typical European card transaction, the money flows through a chain. The merchant pays a fee to the acquirer. The acquirer pays interchange to the issuing bank. The acquirer pays a processing fee to the processor. The acquirer pays an assessment fee to the scheme — Visa or Mastercard.
Now consider who sits at the table designing Europe's payment sovereignty strategy.
The banks. They are issuers who earn interchange fees on every Visa and Mastercard transaction their customers make. The more Visa and Mastercard volume flows through their cards, the more interchange revenue they collect.
The processors. Companies like SIBS, Worldline, and Nexi earn acquiring and processing fees on every transaction they handle — regardless of which scheme it runs on, but with volumes overwhelmingly dominated by Visa and Mastercard.
Both groups are simultaneously funding the European Payments Initiative and profiting from the system it's meant to replace.
This is the structural equivalent of asking oil companies to lead the energy transition. Technically possible. Economically irrational. And the results are exactly what you'd predict: enough activity to demonstrate commitment, not enough disruption to threaten revenue.
To illustrate with public data: SIBS Pagamentos — the acquiring arm of Portugal's national payment processor — reported €55 million in operating revenue in 2024, virtually all from acquiring services. The company explicitly processes transactions for Visa, Mastercard, American Express, JCB, and China Union Pay alongside the domestic MB scheme. Merchant acquiring through digital channels grew 52% in transaction volume and 58% in value during 2024 alone.
Every percentage point of volume that migrates from Visa and Mastercard to a European alternative represents a change in the economics of the entire chain. Not necessarily a loss — but a disruption. And disruption is precisely what consensus-driven, bank-owned institutions are designed to avoid.
The three barriers that PowerPoints don't solve
Beyond the incentive structure, three operational realities make European payment sovereignty far harder than the public conversation suggests.
Barrier 1: Resilience and fallback.
When Visa or Mastercard processes a transaction, the infrastructure behind it includes global redundancy, automatic failover, and decades of battle-tested resilience. If a local processor experiences an outage, transactions can be rerouted. If a regional data centre fails, others absorb the load. This operational depth was built over 50 years of continuous investment and incident response.
Wero operates on SEPA Instant Credit Transfer — an excellent rail for account-to-account payments. But a rail is not a scheme. A complete payment scheme includes dispute resolution mechanisms, chargeback flows, fraud liability frameworks, merchant protection, and — critically — fallback mechanisms that ensure the payment works even when something in the chain fails.
Building these capabilities isn't a technology problem. It's an operational maturity problem that takes years of real-world incidents, edge cases, and corrections to develop. The testing, exercising and rehearsal that makes infrastructure reliable cannot be accelerated with budget. It requires time under load.
Anyone who has managed critical payment infrastructure knows this instinctively: the system isn't reliable because it was well designed. It's reliable because every failure taught the operators something that got built into the next iteration. That institutional knowledge takes decades to accumulate.
Barrier 2: Revenue dependency creates transition paralysis.
Every actor in the European payment chain earns real revenue from Visa and Mastercard volume today. Banks earn interchange. Processors earn acquiring fees. Terminal manufacturers certify for Visa and Mastercard first because that's where the volume is.
Migrating significant volume to a European alternative means accepting revenue disruption during a transition period that realistically spans 10 to 15 years. During that period, the European scheme needs to offer merchants comparable or better economics, consumers comparable or better experience, and the entire ecosystem comparable or better reliability.
Which bank board, accountable to shareholders for quarterly results, signs a strategy that reduces interchange revenue for 10 years on the promise of sovereignty benefits that accrue to the ecosystem rather than the individual institution?
This is the classic collective action problem. Every individual actor benefits from the status quo. The system as a whole suffers. But no individual actor has sufficient incentive to bear the transition cost.
Barrier 3: Global ubiquity versus European coverage.
A tourist from Tokyo, São Paulo, or Sydney arrives in any European city and can tap their Visa or Mastercard at virtually any payment terminal. This global acceptance is the product of bilateral agreements between schemes, processors, and acquirers across more than 200 countries.
Wero serves Europeans paying Europeans. A European merchant who switches from Visa and Mastercard acceptance to Wero-only immediately loses every non-European customer. In tourism-dependent economies — Portugal, Spain, Italy, Greece — this is not a theoretical concern. It's an immediate revenue impact.
The realistic scenario, therefore, is not replacement but addition. Merchants will accept Wero alongside Visa and Mastercard. This means maintaining dual infrastructure, dual certification, and dual operational processes. The total cost of payment acceptance doesn't decrease — it increases. And the merchant's incentive to actively promote the European option over the global one is minimal unless the economics are significantly better.
What the POS terminal reveals
There is a small detail that illustrates the power dynamics more clearly than any financial report.
When a consumer approaches a payment terminal in Portugal with a card that supports both the domestic MB scheme and an international scheme like Visa, the terminal presents options. The international scheme appears first in the selection list.
This isn't a random design choice. It's a contractual requirement imposed by the international schemes. Appearing first means being selected more often — elementary psychology applied at scale across millions of daily transactions.
The domestic processor, which operates both schemes, has limited incentive to contest this arrangement. Revenue flows from both options. The international scheme, however, has every incentive to maintain the preferential positioning, because each transaction on their rails generates assessment fees that flow to their American headquarters.
This single detail — the order of options on a payment terminal screen — captures the entire sovereignty problem in miniature. The infrastructure is European. The rules are American. And the European operators have been compensated just enough to accept the arrangement.
What would move this forward isn't another acronym or another consortium. It's structural separation between the institutions that earn revenue from the current duopoly and the institutions accountable for replacing it. Until that separation exists, every European payment initiative will continue to produce the same outcome — activity sufficient to demonstrate commitment, insufficient to threaten the revenue.
The takeaway
The conversation about European payment sovereignty has been happening for over a decade. The technology exists. The political will exists. The funding exists. What doesn't exist is an honest reckoning with the structural incentives that make every actor in the system a simultaneous advocate for sovereignty and beneficiary of dependency.
Visa and Mastercard didn't build their dominance through superior technology. They built it through 50 years of network effects, operational excellence, and economic incentives that aligned every participant in the chain. Disrupting that requires more than a wallet app and a memorandum of understanding. It requires restructuring the economics so that sovereignty becomes profitable — not just patriotic.
Until that conversation happens, Europe will continue doing what it does best: funding initiatives, signing agreements, and presenting at conferences — while every transaction continues to flow through infrastructure governed from the other side of the Atlantic.
Next time you tap your card at a terminal and see two options, notice which one appears first. That ordering wasn't an accident. And understanding why it's there tells you everything about where European payment sovereignty actually stands.