It will soon be possible for people with Belgian bank accounts to easily pay friends or companies in France or Germany through a banking app, which may eventually work across the continent.
Several years ago, 16 European banks, including KBC, ING and BNP Paribas that operate in Belgium, started working on the European Payments Initiative (EPI), under the name Wero. The aim is to enable payments via payment apps across the Eurozone, allowing instant payments every day, as competition to Visa or Mastercard.
"We are happy that there will finally be competition in this payment market," said Dominique Michel, CEO of Comeos, the Belgian federation for commerce and services.
The around 100 million credit card payments made in Belgium every year account for an annual transaction amount of some €6 billion but cost merchants €72 million as Visa and Mastercard charge a percentage commission on the value of the purchase. The more expensive items bring in much more for the card provider, while their costs hardly increase.
Simplifying payments abroad
Under the current system, VISA has a 37% profit margin while the margin of a supermarket in Belgium is barely 1%. "It cannot be the intention that the payment provider earns more from the shopping cart than the merchants themselves," said Michel.
Comeos hopes the arrival of Wero will bring much-needed competition for the American big players that charge sky-high commissions. But Michel noted that, for the new project to succeed, the costs charged to customers must be "significantly lower than what the US giants charge today".
Albeit later than expected, the "wider market introduction" will be launched in Belgium, France and Germany in June. These countries were chosen as they account for just under 60% of digital payments in the Eurozone.
The app will allow people in Belgium to send payment requests to French or German users. This is a key change in the banking system, as the payment app currently used in Belgium, Payconiq, cannot be used abroad. Conversely, people in Belgium can also not answer payment requests from friends living abroad when they use their national apps.
People affiliated with one of the four major Belgian banks (KBC, Belfius, ING and BNP Paribas), will not even need to download an extra app, as Wero will be integrated into their banking app, as is already the case with Payconiq.
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Afterwards, the app will be developed so it can be used for e-commerce payments and before the final roll-out in 2026 which will see it being used in physical shops, De Tijd reported.
The banks hoped other European countries would follow, however, several banking groups including Spanish banks BBVA and Santander pulled out of the EPI alliance and started their system with Italian and Portuguese payment companies, raising questions about an all-encompassing system.
