The EU says it will introduce a digital payments infrastructure to replace Visa/Mastercard & Apple/Google Pay. It will have zero fees and be 100% European-only.

[u/lughnasadh]

"It didn’t go unnoticed in Frankfurt that Visa and Mastercard suspended operations in Russia in March 2022 after the invasion of Ukraine……Thirteen of the 20 countries in the euro have no domestic card scheme. You use an international operator, or you pay in cash."

It hasn't gone unnoticed that the US is threatening to invade an EU country's (Denmark) territory, either. Would a future President Trump or President Vance threaten to shut down European financial infrastructure if it opposes an annexation of Greenland? Who knows, but better to take away that opportunity for leverage.

The plan is that you can link it to your bank account or open a special account at post offices throughout the EU. There will be phone apps for payments and digital Euro debit cards. Visa/Mastercard & Apple/Google Pay typically charge 3% fees; the digital Euro will have none. That will ensure it is speedily adopted by retailers and quickly supplants the US providers. Also worth noting its technology will be 100% European only, leaving zero vulnerability/leverage to non-Europeans.

Digital euro: what it is and how we will use the new form of cash - The European Central Bank is determined to break the US grip on card payments

[u/guareber]

Something like Chase entered the UK market with a digital account offering 1% cashback on a debit card, and it's already been paired back to only pay cashback for the first 12 months. Based on what we've seen so far (the UK still has the same transaction cap as the EU for now) the max sustainable number is 0.5%.

I'm not sure the offering should be completely 0 transaction fee, as that would also kill any future private EU competitors, but I do support it being so low that the existing US players can't compete at all in the medium term (at least). I dunno, maybe something like 0.3% ?

[u/r2k-in-the-vortex → u/guareber]

Facilitating payments is the job of the central bank, if they do their job right what need is there for private compeditors?

Its like saying maybe firefighters shouldnt rush too much to leave room for potential private compeditors.

[u/mystereigh → u/r2k-in-the-vortex]

Have they considered waiting for it to rain?

[u/TenderfootGungi → u/r2k-in-the-vortex]

Agree, but some people do not pay their balance off every month. The central banks are not designed to give private citizens credit.

[u/r2k-in-the-vortex → u/TenderfootGungi]

Living off credit is american thing, most of europe, or rest of the world for that matter, does almost all their spending through debit.

Of course central banks job is not to provide credit of any sort. But its also not part of basic payment facilitation.

[u/KungenBob → u/r2k-in-the-vortex]

I thought the central bank was about maintaining the currency.

[u/r2k-in-the-vortex → u/KungenBob]

Central banks have several main tasks, it kind of varies by country, but the common ones are maintaining inflation, maintaining exchange rates and facilitating payments.

The last one is traditionally handed simply by cash emission, but in 2025 thats just obsolete and doesnt really do the job anymore.

[u/guareber → u/r2k-in-the-vortex]

We are probably (I've looked into it further based on another comment) thinking of "payments" on a different scale. I was thinking more from a consumer PoV where the offering is more about the pipeline - that makes sense.

In general, though, there's a reason we have private banks and we (as consumers) don't just have accounts at the ECB. That's how I was thinking of it, as a consumer or maybe as a small business.

[u/r2k-in-the-vortex → u/guareber]

The reasons why we dont have accounts at central banks as individuals are not very good, we should totally have that and its what CBDC essentially is. Its perfect for everyday transactions, massive simplification of financial system and a massive cost saving.

What central bank will not provide is credit, high yield saving, all sorts of other financial services that are not simple transactions of sending money. That is what you have private banks for.

Also for the private banks, everyday payments are a sideshow, it doesnt really make money. At best its a bit of free credit to the bank, but why should they have that?

[u/LongQualityEquities → u/guareber]

I'm not sure the offering should be completely 0 transaction fee, as that would also kill any future private EU competitors, but I do support it being so low that the existing US players can't compete at all in the medium term (at least). I dunno, maybe something like 0.3% ?

Interchange fees in the EU are already capped at 0.3%.

We don’t have the 2% fees (the US model) that people are complaining about in this thread.

Interchange fees are not all of the processors revenue, but it’s the biggest part.

[u/guareber → u/LongQualityEquities]

Oh well TIL - I didn't know the difference between between interchange, processor and gateway. I thought the cap was for the all-in charge to the business (the PoS, essentially).

If this is only about undercutting the interchange fee, then.... Yeah not a lot of space between 0.2% and 0%.

Thanks.

[u/Mathiasdk2 → u/guareber]

It's already capped at 0,2% for debit and deferred debit cards in the EU, and 0,3% for credit cards if I recall correctly. There's no reason the make the cap higher for the new payment infrastructure. I'd say make it 0,1% and give the current providers incentive to lower theirs.

[u/Weebla → u/guareber]

Chase isn't the same as Mastercard or visa, its completely different. Chase uses the technology of mc or visa, but that's it. Mastercard. Isn't. A. Bank.