Despite strong internal payment infrastructure, the EU’s practical sovereignty in transactioial respect is limited. A large share of everyday electronic payments in the euro area still depends on non-European payment networks and technology, especially U.S.-based card schemes. In times of global geopolitical turbulence, this reliance raises several strategic and economic questions. Thankfully, Europe has a few valid pathways to achieve payment sovereignty in the near future.
Where Europe Is Strong and What Areas Are Its Weak Points
The EU’s internal payment systems, like SEPA credit transfers, direct debits, and instant bank payment rails, work well for inter-bank transfers and business flows. However, they are not yet widely used at the point of sale or in digital commerce compared with card networks.
Card payments remain the most widely used form of non-cash payment in the EU, accounting for 57% of digital transactions. At the same time, the dominant players in these card networks are Visa and Mastercard, both headquartered in the United States. Furthermore, many EU member states don’t even have active domestic card schemes any longer. In 13 out of 20 euro area countries, international schemes fully dominate card infrastructure.
Experts and European institutions see potential risks in this state of affairs. European Central Bank officials have repeatedly warned that overreliance on U.S. payment providers could expose the EU to economic coercion or strategic pressure, particularly if disruptions occur in international networks, emphasizing importane of having home-grown alternatives.
Thankfully, one regulatory change is expected to soon boost SEPA standing. Thanks to new EU rules, nearly all banks in the euro area must now support SEPA Instant Credit Transfers (also known as SEPA Instant), improving the payment speed without extra cost for merchants and consumers. And yet, it will surely take some time for SEPA to start replacing card networks and foreign wallets for daily purchases, peer-to-peer transfers, bill payments, and online checkouts, rather than complementing them.
EU and Its Payment Sovereignty at a Glance
Payment sovereignty means that a country or region controls the systems people use to pay both online and in stores. It’s not about money tracking but about independence. When payments are controlled by foreign companies or foreign technologies, the EU can be vulnerable to political pressure, sanctions, or disruptions that affect everyday life.
Today, payment sovereignty matters more than ever. Global geopolitical tensions have made it clear that control over critical infrastructure is also control over power. If Europe relies on non-European payment systems, it could face a future where access to money and commerce is influenced by outside decisions.
Fortunately, Europe has the technology and policy tools to build its own payment sovereignty. The question is: how can it be achieved in practice? Here are three key pathways.
Strengthening Europe’s Existing Infrastructure (SEPA + Instant Payments)
One direction we’ve already talked about is strengthening and expanding Europe’s existing payment infrastructure. It is often overlooked but has a strong potential.
SEPA allows fast bank transfers across the EU with the same rules everywhere. It’s a major achievement in fragmented European payments. Europe also has other domestic systems like TIPS that allow near-instant transfers across banks and countries.
The key challenge is turning these systems into everyday payment solutions that can compete with cards and foreign networks. This requires:
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Stronger merchant adoption;
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Better consumer awareness;
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Standardized interfaces;
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Wider integration with retail and digital wallets.
Europe already has the building blocks. It just needs to make them more usable for daily payments.
Pay-by-Bank (Instant Bank Payments)
As European Third Party Providers Association (ETPPA) notes, Europe already has one of the most advanced legal frameworks for Pay-by-Bank systems that can become a solid fundation for its payment sovereignty.
PSD2, the regulation that opened bank data and enabled secure third-party access to bank accounts was launched in 2016. This was a major step forward, but the EU still hasn’t fully turned it into a true European payment system. For Europe to secure payment sovereignty, resilience, and competitiveness, policymakers must ensure Pay-by-Bank works flawlessly both online and in physical stores.
Therefore, today, we’re expecting the updated Payment Services Regulation (PSR) that should fill the remaining legal gaps, so that Pay-by-Bank can finally work smoothly everywhere.
Why is Pay-by-Bank seen as a payment sovereignty means?
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When you pay, your bank is directly involved in the transaction.
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The payment is authenticated through the bank.
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No card networks or foreign intermediaries are needed.
This makes the payment system more secure, faster, cheaper, and less dependent on foreign payment schemes.
Other regions are already reaping the rewards of direct bank-to-bank payments. Think of India’s UPI, Brazil’s Pix, or even the evolving UK’s Pay-by-Bank strategy.
These systems have become national standards for daily payments. Europe risks falling behind unless it finishes the job and completes the PSR that could help Pay-by-Bank to be scaled quickly.
Digital Euro (CBDC)
Another possible route to payment sovereignty is a central bank digital currency (CBDC). In Europe’s case, that’s the digital euro, a project that has recently moved past the theoretical preparation phase to technical readiness focus.
A digital euro would be a digital version of cash, issued by the European Central Bank (ECB). It would be a public currency, not controlled by private companies. This would offer a strong form of sovereignty because:
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The EU controls issuance;
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Payments could be processed through European systems;
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It could reduce dependence on foreign payment networks.
However, the digital euro is still in development and could take years to fully launch. It also faces challenges such as privacy concerns, technical complexity, and integration with existing banking systems. So while a digital euro could be a powerful tool for sovereignty somewhere in the distant future, it is not a quick solution one needs today.
Conclusion
Payment sovereignty is often about building a completely new system. However, in modern realities, one needs quicker and simpler solutions. Therefore, for the EU, it might be wiser to use existing industry strengths, finalizing regulation in the making, and adopting some additional technologies that allow Europeans to pay independently.
To achieve payment sovereignty, Europe can combine a few strategies: finish the Payment Services Regulation (PSR) so Pay-by-Bank works everywhere, gradually prepare for the digital euro launch, but not rely on it as the only solution, and build stronger European payment infrastructure based on existing powerful SEPA and instant payments rails.
If Europe succeeds, it will not only secure its financial independence but also create a more efficient, cheaper, and safer payment system for millions of people.
