Will the Proposed Payment System PEPSI Threaten Visa and Mastercard in Europe?
Posted on 07/11/2020
In November of 2019, a collection of 20 French and German banks, grouped as the Pan European Payment System Initiative (PEPSI), reached an agreement with the European Central Bank (ECB) to work towards developing an independent European payments system. Some of these banks include BNP Paribas, Deutsche Bank, and Santander. The ECB believes that the EU had been far too reliant on non-European intermediaries and was hoping to improve to a more fully digitized payment system without the influence of the Americans. PEPSI (not the soft drink) wants to challenge not just Mastercard and Visa, but to take on tech company payment platforms such as Apple Pay, Alipay, and WeChat Pay. Visa is far more entrenched in Europe than Mastercard when it comes to daily transactions by consumers. PEPSI has the aim of preserving the EU’s sovereignty and economic efficiency for all users and providers, while trying to rely less on U.S. payment networks.
In 2020, the ECB and PEPSI announced the timeline for this payments system to be ready for launch sometime in 2022. However, it’s not time to worry about the value of Visa and Mastercard because a group of 24 European banks tried to do something similar in 2011 with the Monnet Project, but that ultimately failed because of opposition from corporate executives in the EU.
The developing of this EU payment system is something to keep an eye on, but nothing to be concerned about the future of Visa and Mastercard, yet. There is still a long way to go before this payments system can be officially approved, developed, and launched.
