Europe needs its PayPal version

European Central Bank (ECB) policymaker Yves Mersch called on Europe to develop its own global card payment services to compete with international peers and as a defence against any further escalation in geopolitical tension.

Noting the dominance of California-based PayPal for online payments, and the services offered by Alphabet Inc, Apple Inc, Facebook Inc and Amazon.com Inc, Mersch warned that European providers such as Germany’s Girocard and France’s Cartes Bancaire are too nationally focused.

“Our reliance on non-European card schemes for domestic payments in Europe is suboptimal,” he said in a speech in Paris yesterday. “I fear that global giants from outside Europe will use their network power to increase their presence further.”

The ECB board member, whose portfolio at the central bank includes payment systems, said European banks seemed to have “surrendered” much of the business, with the strong regulatory framework in the European Union “exploited” by multinationals. Chinese companies Alibaba Group Holding Ltd. and Tencent Holdings Ltd. were also advancing, he said.

Mersch noted the risk of such dependence on third countries at a time when tariff threats from President Donald Trump’s administration are raising tensions between the U.S. and its trade partners. While the EU shouldn’t resort to protectionism to “artificially” promote its own payment services, it should address the lack of European providers.

Despite a series of European directives aimed at harmonising the payments market, “European banks seem to have surrendered much of the pan‑European payment business,” he complained.

“Instead, those foundations are often exploited by multinationals from outside Europe offering innovative, consumer-friendly solutions,” he added, pointing to the head-start enjoyed by US tech giants like Paypal, Google, Amazon and Apple or Chinese firms like Alibaba and Tencent.

The same is true of card payments, with national systems like France’s Carte Bancaire or Germany’s Girocard incompatible with each another, while American services like Mastercard or Visa are accepted almost everywhere.
With hundreds of millions of Europeans using American payment providers, “we have to be mindful of the fact that extraterritorial jurisdiction could, in a worst‑case scenario, affect the operation of those companies and disrupt payments between European counterparties”, he warned.