Most, if not all countries have their own domestic payment systems. This is about cross-border payments within the EU.
“Breakup” seems a bit exaggerated considering the % of payment volume which might switch to the new system.
Most, if not all countries have their own domestic payment systems. This is about cross-border payments within the EU.
“Breakup” seems a bit exaggerated considering the % of payment volume which might switch to the new system.
> “Breakup” seems a bit exaggerated considering the % of payment volume which might switch to the new system.
Brazil introduced Pix in 2019, it's now the most used payment method for all transactions nationwide, ahead of both cards & cash.
India introduced UPI in 2016, it now handles >80% of digital payments there, and handles more transactions a day than Visa does worldwide.
It's totally plausible to me that a similar replacement could overtake cards completely within a decade. The lack of cross-border support means "Pay with Bizum" is a niche feature that's only useful in Spain, but if "Pay with Wero" becomes an instant & ~free payment method that works for hundreds of millions of users then it's a very different ballgame.
And also much of East and Southeast Asia as well: AliPay (CN), Kakao (KR), PayPay (JP), JKO (TW), GrabPay (SG/MY), QRIS (ID), etc. with various interop compatibility between them. If you build it they will come.
Russia switched 100% of its payments seamlessly, no reason for the EU not to do the same. Build up the network and tell banks to use that network even for transactions initiated with Visa/MC cards. At that point cards are still usable, but effectively a piece of identification plastic not directly controlled by Visa/MC anymore.
Italy has a similar size economy as Russia and they also have their own payment network. Technically there is nothing special. Countries have to come together and decide on a solution together.
On the other hand, if you step back a little bit, Russia is currently stuck in a Sovjet civil war, so I don’t think the Kremlin way is that great.
It is a good way if you want to protect yourself against pressure from the US. Sure, the Kremlin did it for reasons that don't exactly paint them in a good light, but this has nonetheless become a real risk for Europe as well.
> seamlessly
It's not seamless if it includes a war, global isolation, exodus of all business and disconnection of the banks. This means they were left with no alternative, in which case, sure, it's 'seamless' to use the only alternative method.
Europe will have a lot of friction with consumer habits and Visa will always be relevant for buying things from outside EU. These are all competing entities which hate anything that makes them seamlessly lose their business.
Russia did it after 2014, not after 2022. So yes, it was seamless
That's not how it worked, Russia prepared well in advance before the war (admittedly, after Crimea-related sanctions scared the hell out of them in 2014). When the 2022 sanctions dropped, transactions within Russian borders kept working seamlessly because the banks were already using the Mir network for those regardless of card types, i.e. you can still use your Russian-bank-issued Visa today for internal purchases. And I firmly believe that Europe needs the same kind of security for its digital payment systems, something akin to IBAN that solved this for EU-wide bank transfers (which is why I'm not sure if it's wise to use some random commercial product as a base).
Of course, right now nothing can dethrone Visa/MC for international payments, besides perhaps crypto in very limited and often shady scenarios. And Europe can't really do anything about that. But that's a different problem altogether (one that annoys me to no end as a frequent purchaser of digital products from Japan).
Nitpick: IBAN is a global identifier for a bank account. The transaction system where you enter an IBAN is called SEPA payment, or SEPA bank transfer, or something along those lines.
Just like I access hacker news by the Internet, not by IP address.
Thank you for the correction, you're absolutely right.
This isn't about the payment network. The EU already has their own payment network, too.
It's about card payment and even if things ending up in your network they first going through visa.
And it's about online payment (PayPal).
A lot of European online stores support asynchronous SEPA transfer. You complete your order, they issue a code and amount of money to send. You send the money with that reference code attached and they don't ship it until they get the money. It works for online order because you might be waiting a week anyway.
yes, but in many cases that is because this payment method predates "modern" online payment and they "just kept it around"
depending on what you buy "a lot" can be close to non or close to all
In the end it has major issues:
on the consumer side
- majorly reduced consumer protection compared to e.g. pay pal. If you wire transfer by yourself doing charge backs ~two weeks later after not getting the goods is hard, potentially non-viable (dep. on country etc.).
- you can typo address or reference number, leading to a lot of headaches (also recently they changed it so that the recipient "name" has to be correct, but many companies send you only IBAN,BIC,ref number and not the exact by letter company name under which the bank account operates...)
on the seller side (sometimes also affecting consumer)
- the order is in a "in-between" state until they receive the money, which can be days. During that time they can't rely on actually receiving the money but they also have to keep the good ready to sell. Especially in situations where you e.g. sell limited time/amount goods (e.g. resellers, collector goods etc.) this can be a pain. If you then add any form of expiration data (e.g. concert ticket) this can make the payment method a absolute no-go.
- your selling/order processing system needs access to your companies incoming transaction history, which preferably should be a separate account. This mean additional administrative overhead and failure conditions. Also many such systems are kinda build crappy in my experience.
while I have been using that in some situations it really isn't competitive as a modern online banking solutions
but what it also shows is that you can get really far with comparably "dump/naive" methods.
----
Also for completion there is one additional SEPA method: That is you give the company the right to just take money from you bank account. You can split that into 2 versions: 1) permission for fixed amount reoccurring payments (e.g. donations,subscriptions) 2) arbitrary amounts at arbitrary times. The later requires a relatively high burden/overhead on the sellers side so you only see it with Amazone or Paypal
Standard legal protections still apply, one of you can sue the other for failing to fulfil the legally binding contract you made when you clicked checkout. Credit card payment can be fraudulent too, in all the same ways.
Not in Russia, payments made with a Visa card do not go through Visa any longer, at all. You can even use expired Visa cards (with most banks).
yes,
but also this means that major security features don't work anymore creating a higher risk for the bank
and Russia prepared for this for years after the sanctions related to the annexation of Crimea
and Russia kinda,nearly cut fully ties for the US
and it still hurt them quite a bit anyway
so such thing would be more like a last resort emergency solution then the "getting less dependent on while not cutting all ties" situations we currently have
> This is about cross-border payments within the EU.
no it isn't
for bank to bank payment your statement might be true
but this isn't true for EC card payment and most online payment
_all_ EC cards either use the Visa Payment network and secure modules or the Mastercard one (but by now it's mostly Visa in most places). Sure they have your banks local branding but it's Visa anyway.
This also applies to payment terminal, most (not all) go through the Visa payment network to process payments.
And even in the same country a lot of online payment either goes through credit cards (again mostly Visa in EU) or PayPal. This isn't technically needed at all but due to fragmentation whatever alternative you want to use is just sometimes available.
Which is where Wero comes in:
- try to reduce fragmentation by making it a cooperation across many banks (of which most had their own failed PayPal alternative)
- onboard people on (local) online banking and private Phone2Phone payment (e.g. bill sharing)
- then (now) expand to pushing some payment terminal providers to support it with Phone based payment. There are multiple initiatives for it.
The later part is possible due to 3 reasons:
- payment apps on phone bypassing secure module monopoly nonsense related to EC/Credit cards and visa
- a lot of the in-person checkout systems of small businesses are now a tablet + separate cash register + EC terminal. This means that even if the EC terminal doesn't support Wero the payment system can still do so through their tablet.
- Also I think some of the wider used payment terminal in large EU specific chains can get Wero support with a software update.
Still it's by far not a perfect situation:
- still too much fragmentation/to little adoption by banks
- "old" payment terminals and (physical) checkout systems which are bound to Visa and can't easily be updated
So there most likely won't be a hard break anytime soon, and your EC card will likely continue using Visa secure module and network for a very very long time.
But having a technical working alternative which can slowly start eating market share is already a huge step forward.