[dadoum]

Can anyone explain me exactly why it is a suitable alternative to VISA and Mastercard (and why people were waiting for it). I am trying to understand the full picture here, so multiple things come to my mind.

First, SEPA instant payments already exist and are really instant up to a certain amount, and I am guessing that Wero builds on top of that a sort of identity layer, to sidestep the whole IBAN thing. But it is likely more than a SEPA alias, since it was supposedly hard to set-up.

Second, VISA and Mastercard are worldwide payment networks (or rather, they each operate payment networks with various names?). But I am failing to grasp what's hard to reproduce here too. I heard that in Europe there were only a few national alternatives, like Carte Bancaire or Girocard, but why? Is it just because banks can't agree on the design of an alternate network? But all the fees associated with using VISA or Mastercard should be a big enough incentive to push something else. (basically what's a payment network?)

And lastly, why are all the new (free) digital banks (néobanques as we call them here) relying on either Mastercard or VISA and never on Carte Bancaire for example, while it generally offers lower processing fees (and that they can be cobranded).

I think I am missing a lot of context, and I asked LLMs a while ago about these but themselves don't really explain what is the infrastructure needed to operate such a network.

[holgerschurig]

Well, Visa and Mastercard are expensive and suck. The shop always has to pay them some percentage for a transaction. That adds up.

For decades, european countries like Netherlands or German had cheaper alternatives, e.g. in Germany the old "EC Card" and now "girocard". That costs a shop just a fixed amount of cent... and a very low amount.

(That is BTW one of THE reasons why US travellers won't see "Credit cards accepted" in every store ... our alternatives are just cheaper, so the market decided)

Also, Visa and Mastercard as US companies. So they are sniffing on all european transactions.

And it happened more than once that US companies tried to execute bullshit US laws in Europe. Example: there was once an german online shop that sold cuban cigars. Eventually the US website that hosted the shop said "Oh, that's not allowed" --- despite it perfectly legal by german law. And they didn't just delete this cuban cigars, they disabled the whole shop, with IIRC 20000 EUR positive balance. And the shop owner didn't even get his money, since their customer service sucked and was only automated response and untrained indian call center clerks.

So no, we cannot really depend on US services. They are expensive, they customer service sucks, they are sniffing either directly or let the NSA sniff everything.

And, bank-wise the USA seems to be some decades back (not online-bank-wise!). I mean, they still have pay cheques? Not direct bank transfers? Shudder. No wonder that, if they have no alternatives, they think everything must be Visa or Mastercard operated.

[pepa65]

I am sure they have no direct transfer because of the credit card lobby... Just trying to keep screwing their customers as usual.

[Freak_NL]

It's really simple.

You're in the Netherlands, and you are going to buy something in an on-line store. Steam perhaps, or any Dutch retailer.

You put the game in your Steam cart, and go to pay. You select Ideal (which Steam provides as an option), you pick your bank, and you follow the on-screen instructions (but you probably do that pretty much automatically). Usually that means scanning a QR code with your bank app on your smartphone where you confirm the amount and recipient, but you can use a physical card reader with your debit card for an OTP to use as well and do it in your bank's online environment in the browser.

That process is what the whole of Europe wants (Wero builds on the Dutch Ideal). It is stupid simple, and once you've used it you don't want to deal with credit cards and bank transfers for buying a thing on-line any more.

That's all there is to it. There is a whole country which already does this, and it works so well everyone wants it. No major US companies needed (big plus these days), and no parasites like Klarna either. Just an easy way to pay a shop using your bank account, just like you use a debit card in physical stores do the same.

[microtonal]

That process is what the whole of Europe wants (Wero builds on the Dutch Ideal). It is stupid simple, and once you've used it you don't want to deal with credit cards and bank transfers for buying a thing on-line any more.

Can confirm. I almost never pay by card because iDEAL is simply much smoother and even many Shopify/Stripe shops offer it as a payment option nowadays. Getting this on all European webshops, for P2P payments (like Tikkie in The Netherlands), and in-store payments is just fantastic.

[drnick1]

> Usually that means scanning a QR code with your bank app on your smartphone where you confirm the amount and recipient, but you can use a physical card reader with your debit card for an OTP

This seems to be mobile-centric system that essentially requires a cell phone, and probably one blessed by Google or Apple. The app will probably leak a huge amount of meta data, far more than a credit card (especially a privacy-oriented prepaid one). This kind of "solution" is dead on arrival as far as I am concerned.

[amaccuish]

Did you miss the whole part where op talks about using your physical card as an alternative?

[sghitbyabazooka]

who's paying for the card reader at home?

[Freak_NL]

My bank is. It is part of their service. Obviously I pay a service charge, but the card reader is not charged separately. The card reader serves a purpose for the bank as well, because it acts as a back-up for when people lose their smartphone (by stupidity or theft), or when their app is having issues.

[haagch]

> but you can use a physical card reader with your debit card for an OTP to use as well and do it in your bank's online environment in the browser.

That's nice for ideal users, but Wero here in Germany is completely exclusive to mobile banking apps.

I have yet to see any actual confirmation in any way that ideal will keep the alternative web based payment once they fully merge with Wero. On the one hand, EPI never puts out any concrete info, on the other hand no Journalist ever seems to ask EPI representatives the important questions.

[pbreit]

How is that better than a card payment? Cards are accepted by far more merchants, have dispute rights, are inexpensive (in Europe) to process, supported by Apple & Google Pay, superior checkout experience, etc.

[wongarsu]

I've never used their dispute system, and I don't think that holds much value in Europe. At least in Germany a contract is a contract, if I claw back the payment the other party will just start the collections process. A process that has teeth and generally will recover the money from me, worst case by garnishing wages.

On the other hand Visa and MasterCard are not neutral actors. They have used their market power in the past to pressure merchants to change according to American moral values. And with the current administration I have little faith that this will stay at moral values

[microtonal]

The whole flow is so much better than card purchases, where you have to enter all the data (or see your password manager's autofill fail) and then you have to go to your credit card provider's app to acknowledge the transaction.

Cards are accepted by far more merchants,

The vast majority of Dutch online transactions are done because pretty much every Dutch online shop supports it. Also many international shops through Shopify and Stripe. Many Dutch online shops do not support credit card payments. So iDEAL is the far lower friction option here. And there is no American company in between (at least for most national payments). It's great to see this system, that served us two decades by now finally get rolled out across Europe. They tried it before in the early 2010s, but the non-Dutch banks were fighting turf wars.

[ceronman]

1. Credit cards are not that common. People usually have debit cards. Those can sometimes be used online but they're not widely accepted. My debit card is Maestro, which is not accepted in many places.

2. Even with my Mastercard credit card, the process is still inconvenient. For small purchases, it's fine. But for larger ones, there is an annoying second factor authentication, I have to enter a special password, and the wait to receive an SMS.

3. Visa and Mastercard fees. Most of the time these are paid by the merchant. But sometimes the customer has to pay more if the payment method is credit card. Some places don't accept these at all.

In general iDEAL is simple, secure and convenient. Not only to pay online, but also for example for splitting a bill with friends. I'm very happy to see this being adopted more widely in Europe.

[quotz]

Cards are reliant on US companies -> Visa / Mastercard. The European Payment Initiative wants to remove reliance on the US. Perhaps there can be a ECB payment rail/network that would support cardlike payments too.

[pbreit]

So it's mainly a nationalism thing? Is that enough to displace the superior option?

[andor]

It's not really nationalism since this is a European effort across multiple countries. But for all of them, it will improve the national security posture.

The only superior aspect of Visa/Mastercard payments is that they are more widely accepted, and that's something that can be changed.

[hocuspocus]

I don't see where card schemes are inherently superior in the age of NFC payments.

There are huge countries (China, India, Brazil, ...) where people moved from cash to mobile payments.

Europe has always been in the forefront of this space, Swish exists since 2012, it's about time we get a pan-European solution.

[MilaM]

You should not be distracted by the fact that SEPA Instant payments are used as the clearing mechanism. The Wero (EPI) backend IS the payment network and provides the messaging layer between the customer's bank and the merchant. Payment processors can interface with Wero and provide payment services for merchants in much the same way as they offer credit card payments.

[cyberpunk]

Sepa-inst requires 10 seconds or less end to end, this isn’t as easy as it sounds to implement, but we are kind of there.

The problem is how do you initiate this payment? Some kind of scannable code or nfc interaction seems to be the missing part. I’d also like to see some kind of physical card also work for those who don’t want or are unable to have an attestable device with them.

[WA]

I‘d love if every receipt had an EPC QR code on it: https://en.wikipedia.org/wiki/EPC_QR_code

You scan it with your banking app and have all the details. But it’s not super seamless. If you find this code on a website on your phone, you have to screenshot the code and load it in the app. Would be nice if there was some kind of deep-link standard.

[pbreit]

Industry observer Dwayne Gefferie took a stab at it (although I'm still highly skeptical): https://dwaynegefferie.substack.com/p/epi-european-payments-...

[omnimus]

I think they are hoping wero would one day work in countries worldwide as competition to visa/mastercard.

EU local payments already work instantly and feeless in many countries through SEPA. Lot of these countries are already on trajectory to gradually get off visa/mastercard for domestic payments as every ecommerce store pushes SEPA as the default payment to save on fees.

[hocuspocus]

There's no need for a worldwide solution, federation and interoperability between major schemes are enough.

The same way AliPay can be used in most Asian countries already, we can imagine a world where EPI, UPI, Pix and so on interoperate smoothly.

I assume Visa and MC will try to remain walled off as the US are a big and slow mover in this space, until they'll need to open up as well.

Note: payments (unlike transfers) are never really zero fees, for good reasons.

[tormeh]

For the neobanks I think it's very easy to explain: Their customers need Visa or Mastercard. No Visa/Mastercard? No retail customers. It's as simple as that. Any other payment scheme is a bonus thing that can be put on the backlog.

[wolvoleo]

That's a chicken/egg problem. It's going to be really easy to circumvent. Just make an EU card provider and mandate that it has to be accepted everywhere in the EU. Then users will want it and a critical mass will be created for vendors outside the EU to accept it as well.

[hocuspocus]

EPI initially wanted to become a card scheme but quickly gave up.

Plastic cards are yesterday's battle, many national schemes exist in large European countries (CB in France, Girocard in Germany, ...) and would be hard to overhaul.

Focusing on mobile payments makes sense. Once a critical mass is reached (Austria, Benelux, France, Germany) there's a clear incentive for other players to work on interoperability, even if the pricing structure might be very different.

[wolvoleo]

Plastic cards no but they are also the underlying layer of digital PoS payments of course. They also use credit card numbers and infrastructure. This is the problem. Every time I buy something in a shop it goes through an American company.

[hocuspocus]

That's the thing, if you pay with a French payment card (plastic or through Apple/Google Pay) in France, it's processed by the domestic network CB. This is also true in other European countries with their respective networks. EPI tried to bring a new pan-European card scheme that would have superseded those, it didn't work out.

On the other hand, there's a significant chunk of the population that just pays using their mobile phone. They don't care about cards, numbers (which are going to disappear anyway), or the legacy infrastructure behind that.

[pbreit]

The merchant/processor/issuer network with all the correct incentives is (nearly) impossible to replicate. Visa and Mastercard work more or less, perfectly.

The only entities that need/want "instant, non-recourse payments" are fraudsters.

[globalise83]

In the EU countries with local instant bank payments schemes they are much more popular with consumers than credit cards when paying attrusted merchants, who in turn pay around a quarter in fees of what they'd have to pay for cards. No need for expensive credit cards schemes in Europe any more.