European Payments: New Methods, Less Madness

Contactless Solutions Are Evolving

In June 2024 Apple agreed to open its mobile wallet technology to third party service providers.¹ The European Commission reported commitments from Apple to:  

• Allow third-party providers to access the NFC input on iOS devices free of charge
• Apply fair procedures and eligibility criteria for access to NFC technology
• Enable consumers to set other providers as default payment providers for NFC
• Establish monitoring and independent dispute settlement systems
• Provide the above commitments for all iOS users registered in the European Economic Area.²

Since these commitments were made, the contactless market in Europe has evolved, for both private and public players. Vipps in Norway was one of the first companies in Europe to develop an ApplePay alternative for iPhone.³ Local card payment schemes have also added tap-to-pay capabilities such as Girocard in Germany.⁴ Spending on Germany’s Girocard network reached an all-time high in 2024, as consumers use the scheme for more contactless and smaller value transactions.⁵ 

Similarly, PayPal has developed NFC capabilities for in-store terminals that support Mastercard payments.⁶ This solution will also facilitate PayPal’s previously exclusively online Pay Later option for in-store transactions.⁷ PayPal has also announced a rewards program offering cashback incentives for use of contactless capability.⁸ 

Local payment methods in Europe have continued to evolve and utilize NFC technology. Poland’s Blik, launched in 2015, has expanded into Romania and Slovakia.⁹ Initially a platform focused on e-commerce, it has grown into an in-store player following access to NFC technology. Blik allows consumers to authorize transactions through a 6-digit code provided to consumers’ bank apps.¹⁰ QR-code facilitated transactions are also growing in Europe with Blik and Switzerland’s Twint.¹¹ Blik experienced meteoric growth in 2024, posting 43% year-on-year growth in spending, with contactless transactions growing the fastest, at 58% YoY.¹² Twint has seen over 30% growth year-on-year in transactions in 2024, reaching over 770 million transactions.¹³

Market Unification and Cross-Border Instant Payments

Outside of traditional card-based rails, European payments are expanding into instant payments. Wero, a digital wallet launched by the European Payments Initiative, operates in Germany, France, and Belgium with plans to expand into the Netherlands and Luxembourg.¹⁴ The platform currently offers peer-to-peer (P2P) transactions using SEPA Instant Credit Payment rails facilitated by mobile numbers, emails, and QR codes.¹⁵ Planned capabilities to add to the platform include Buy-Now-Pay-Later services, customer loyalty programs, ecommerce payments, PoS payments, and recurring capabilities.^16,17 Wero aims to be a pan-European instant payment digital wallet provider.¹⁸ If Wero achieves this goal, it will align the European instant payments landscape closer to that of Brazil’s PIX in terms of consistent user experience. Where PIX provides guidance for third-party providers’ user interface, the current SEPA system does not mandate user experience and consistent user experience for instant payments may positively impact adoption.¹⁹

Stablecoin Regulatory Framework

Recently the European Union approved ten firms to issue stablecoins.²⁰ This allows those firms to operate in the region, with three of the firms offering issued stablecoins pegged to both the Euro and U.S. dollar.²¹ Some platforms have delisted certain stablecoins that are not compliant with EU’s Markets in Crypto-Assets (MiCA) regulation, which aims to provide consistency across 27 countries in terms of licensing crypto-asset service providers, transparency through disclosures, and issuance and liquidity requirements.²² For stablecoins, MiCA requires fiat-backed stable coins to be issued against liquid reserves at a ratio of 1:1.²³ This legislation has led to shifts in the market with some coins already being delisted, especially stablecoin providers outside of Europe.²⁴

What Does This Mean for EU Retailers?

Merchants in Europe are in a complex and changing environment. As new alternative payment methods and rails come into play, consumers’ expectations change. Each merchant must make decisions nearly daily to keep up with both the market and their competitors.

To learn more about these developments, reach out to CMSPI.

It is paramount merchants balance and align payments priorities with company priorities (Figure 1) now more than ever given macroeconomic factors such as inflation and international trade volatility. Data can help inform decisions, but with so many factors outside of merchant control, collaboration across industry stakeholders is a must.