Writing in its latest Monthly Report, the Bundesbank identifies a need to press ahead with the development of universal Europe-wide payment methods, ideally based on real-time (instant) payments. The Bank’s experts stress the need within Europe for European alternatives to universal payment schemes such as PayPal or Apple Pay. The challenge for European payment service providers, the Bank’s experts write, is to create effective pan-European payment solutions as an alternative to those offered by their increasingly successful global rivals. One conceivable way forward, the authors write, would be to establish a kind of European brand for payment solutions indicating that a national system for e-commerce payments, for example, will generally work in other European countries as well.

There is a risk that network effects and economies of scale and scope might cause the existing large platforms to evolve into monopolies, meaning that the market will develop along the lines of the “winner takes it all” principle.

Service providers in the German banking industry have already made extensive preparations to adapt to the new competitive environment in the payments space, making greater use of innovative solutions such as a digital girocard allowing customers to pay by smartphone. However, in order to hold their own in the European market and compete as equals with their global rivals in the long run, the existing payment schemes will need to expand their reach beyond their national perimeters and be available across country borders, the report explains.