Payments: the bargain keeps changing

Payment networks made economies more connected while giving their operators enduring commercial positions. Countries have tried regulation, domestic alternatives and cooperation to change the bargain. AI-led shopping and digital money are opening new contests over who earns, who decides and how much control domestic infrastructure provides.

American card networks Visa and Mastercard earn recurring income from purchases made around the world. Their reach makes them valuable to businesses and difficult to bypass. For countries relying on them, the question extends beyond the price of a payment to how much income flows abroad and how much influence they retain over infrastructure their economies need.¹

More shopping has moved online, while cards and digital wallets have displaced cash in shops. Across the euro area, cash’s share of day-to-day payments fell from 68% in 2019 to 40% in 2024, a measure that includes online transactions, not just purchases at the till.² Within card payments, international networks have also gained ground against domestic schemes. In March 2026, the Eurosystem reported that more than two-thirds of euro-area card transactions operated under rules set by non-European companies.³

The banks choosing which cards to issue had different interests from the merchants paying to accept them. Visa and Mastercard could attract banks by offering higher interchange fees: the income a bank receives when its customer pays by card. Merchants bore the charge. A domestic network offering lower fees could therefore be cheaper for shops but less attractive to banks. Competition for the banks’ business could drive payment costs up.⁴

The EU’s 2015 interchange cap addressed that incentive as well as the cost to merchants, who subsequently saved an estimated €1.2 billion a year. The regulation also challenged restrictions on payment choice and competition, improving the conditions for domestic schemes. It changed the bargain, but the networks’ own fees remained outside the cap. Governments could influence the cost and terms of using international networks without replacing them.⁴

In Canada, Interac provides domestic debit and transfer services, while the government has negotiated lower Visa and Mastercard interchange fees for qualifying small businesses.⁵

Brazil changes the route

Brazil used its central bank to build and spread an account-to-account alternative. Pix launched in November 2020, with larger financial institutions required to participate: a new payment route would be of little use if customers could not reach one another.⁶ By 2025, payments from individuals to businesses accounted for 43% of Pix transactions.⁷ Early research put average merchant charges at 0.22% of payment value, against 1.1% for debit cards. The services differ, but merchants had gained another way to accept payment at a lower cost.⁶

Visa saw an opportunity in Pix too. In June 2025, it announced Conecta, a Brazilian subsidiary that would let customers pay merchants through Pix without leaving the merchant’s checkout to open their banking app.⁸ Brazil’s alternative to the card networks offered Visa another way to earn from payments.

The following month, Washington opened a trade investigation that included Brazil’s treatment of American payment providers. Its June 2026 findings challenged the requirement that larger banks and other financial institutions participate in Pix, its prominence in banking apps and the central bank’s position as both regulator and operator. American companies could participate, but Washington disputed the terms of competition. Electronic payments were among several grounds the US administration cited for a 25% tariff on certain Brazilian goods in July 2026.⁹ Brazil’s choices about its domestic payment infrastructure had become part of a much wider trade dispute.

Connecting alternatives across borders

Alongside efforts to regulate fees and competition, European banks and payment providers are now joining their services into a wider network. Their stated aim is to give customers and merchants a European alternative across borders, reducing dependence on international providers.¹⁰ The participating services, including Wero and Vipps MobilePay, already serve about 130 million users. In September 2026, the partners established the European Network for Payments to operate a common hub. Some cross-border transfers already worked; the wider network was still being prepared.¹⁰ The commercial ambition carries political weight: the Eurosystem warns that dependence on non-European providers exposes payments to “economic or political leverage”.¹¹

Wero’s operator, the European Payments Initiative (EPI), says the service combines European governance and payment rules with European infrastructure for instant bank transfers. It nevertheless relied on international cloud providers at launch. EPI says only those providers could meet the performance, security and stability requirements for a competitive service. It intends to increase its use of European providers but acknowledges continuing dependence outside Europe. International technology helped establish the European alternative; reducing that dependence requires further work.¹²

Sustaining an alternative also requires businesses willing to invest. In Denmark, the banks, merchants and operator behind Dankort had different reasons to favour or neglect the national card as customers moved to phone wallets. Renewal now requires a new bargain, including higher merchant charges to help fund development. Keeping the domestic option now asks merchants to pay more, even though low charges were part of its value to them.

The next contest is already taking shape

Countries are making these investments while the way people buy is changing. Visa and Mastercard are developing ways for AI agents to transact securely. A country could retain its own payment infrastructure while the agent choosing the purchase, the wallet authorising it and the platform holding the customer relationship remain controlled elsewhere.¹³ The domestic route would still be valuable, but it would not determine who shapes the purchase or earns from the surrounding services.

The money moving through those routes is changing too. Tokenisation can bring an asset’s transfer and its payment together, reducing delays and reconciliation work. Dollar-denominated stablecoins, privately issued tokens designed to track the dollar, can make dollar payments easier across borders.¹⁴ The ECB has warned that European banks could lose deposits as well as fees and data, while dollar-based settlement could weaken the euro’s role.¹⁵ A European payment route need not strengthen the euro.

In September, the Eurosystem launched Pontes, an initial service allowing wholesale tokenised-asset transactions to settle in central-bank money. The proposed digital euro addresses everyday payments instead.¹⁶ Alongside the work to connect existing services, these investments address different parts of the system: how people pay, how assets settle and whose money they use. Countries must decide which capabilities to build, which to share and which dependencies to accept - and bear the economic and political costs of sustaining those arrangements as commerce changes.

Connected works

This case develops the payments history behind Sovereignty in a world of layered dependencies, which examines what countries and companies seek to retain or develop across payments, cloud services and AI.

The more detailed Danish case, Dankort: what Denmark is choosing to keep, follows how banks, merchants and customers made a domestic system useful, and why keeping it now requires a different commercial bargain.

The alphabet soup of agentic commerce examines how agents, platforms, wallets and payment providers are competing to shape the relationships through which purchases are made.

Notes

Piero Cipollone, ECB, Monetary sovereignty in the digital age: the case for a digital euro, 27 September 2024, sections on market failures and competition. Connects international payment-provider profits, European market fragmentation and the scale needed to invest; also discusses wallets’ effects on fees, data and customer relationships. This is the ECB’s policy argument, not a measurement of national income leakage. Merchant charges are distributed among networks, issuing banks, acquiring providers and other participants. Tax contribution depends on taxable activities, entities and jurisdictional rules; a network’s nationality does not establish where all its profits are taxed. The question of local contribution is distinct from whether a specific digital-services tax applies. No estimate of payment-network tax paid or unpaid is made here. ↩
European Central Bank, Eurogroup presentation, 20 January 2025, slide 2, chart corrected 14 February 2025. Drawing on SPACE 2019, 2022 and 2024, it reports cash’s share of the number of non-recurring, day-to-day euro-area payments falling from 68% in 2019 to 40% in 2024. This includes physical, online and person-to-person payments, but excludes recurring bills; it measures transaction counts, not value. SPACE 2024, sections 2.1–2.4, distinguishes the growth of online purchasing from changing payment methods at physical points of sale. The decline in cash does not measure a corresponding gain for Visa and Mastercard: domestic cards, account transfers and other payment instruments also participate. ↩
European Central Bank, Report on card schemes and processors, February 2025, printed pp. 5–6, documents declining domestic market shares for national card schemes in most cases. The Eurosystem’s March 2026 payments strategy, section 5.1, printed p. 12, states that more than two-thirds of euro-area card-based transactions are processed under business rules set by non-European companies. March 2026 is the statement’s date; the passage does not specify the underlying observation year. This concerns card transactions, not all payments, payment value or the proportion of merchant charges flowing abroad. The earlier report and later strategy use different scopes and should not be combined into a numerical growth series. ↩
Regulation (EU) 2015/751, especially recitals 10–11, explains how competition to attract issuing banks could raise interchange fees and put lower-fee domestic schemes under pressure. The regulation also addressed restrictive practices affecting payment choice and competition. European Commission, 2020 evaluation of the Interchange Fee Regulation, printed pp. 3–4, reports that domestic-scheme exits had stopped after the regulation took effect and that surviving domestic schemes’ shares of issued cards remained stable during the period examined. The cap therefore supported domestic competition as well as merchant savings; the finding does not establish a permanent reversal of international networks’ expansion. Printed pp. 6–7 and Table 2 (2015–2017 comparison) estimate approximately €1.2 billion in annual merchant savings and €550 million in additional international-scheme revenue. These are historical estimates, not current 2026 totals. The caps concern covered consumer interchange, not total merchant charges. The evaluation found savings and rising unregulated scheme fees but did not establish a causal link between the two. Interchange generally goes to issuing banks; merchant charges cannot all be treated as network income or money leaving the country. ↩ ↩²
Interac, Company overview, distinguishes its domestic debit and e-Transfer services; Interac is not solely a bank-to-bank transfer service. Department of Finance Canada, October 2024 fee announcement, records negotiated Visa/Mastercard interchange reductions for eligible small businesses effective 19 October 2024. The government's projected savings are not verified realised savings; the reduction is not a universal cut in all merchant charges. Interac's longstanding infrastructure and this fee intervention are separate developments, not one newly launched sovereignty programme. ↩
Duarte et al., Central banks, the monetary system and public payment infrastructures: lessons from Brazil’s Pix, BIS Bulletin 52, March 2022. Reports the November 2020 launch, required participation for institutions with more than 500,000 transaction accounts and early lower merchant costs. See also Fast payments: design and adoption, BIS Quarterly Review, March 2024, footnote 7, citing the 2022 research: 0.22% for Pix, 1.1% for debit and 2.2% for credit. These are merchant charges, not network revenues. The observation concerns early adoption, not a current 2026 fee quote. Account transfers and credit-card services have different features; no like-for-like cost estimate or claim of total foreign-technology independence is made. ↩ ↩²
Banco Central do Brasil, Relatório de Gestão do Pix 2023–2025, printed p. 15, graph 2.1.3. The 43% figure is the share of Pix transaction counts from individuals to businesses in 2025, not a share of payment value, retail sales or card payments displaced. ↩
Visa, Visa Inc. lança Instituição de Pagamento focada em movimentação financeira, 5 June 2025. Visa announced a Brazilian subsidiary focused initially on Open Finance and Pix payment initiation, with operations expected to begin at year-end. This establishes its announced commercial strategy, not verified launch, adoption or revenue. Foreign participation does not itself establish who captures most of the value. ↩
USTR, Section 301 determination on Brazil, 1 June 2026, and its Federal Register notice, which names Pix. The 15 July final-action announcement imposes a 25% tariff on certain Brazilian goods. The investigation covered digital trade and electronic payments, preferential tariffs, anti-corruption interference, intellectual property, ethanol access and deforestation. The action cannot be attributed to Pix alone. USTR’s characterisation of Brazilian practices is its position in the dispute. ↩
Bancomat, Bizum, EPI, SIBS and Vipps MobilePay, February 2026 memorandum, and European Network for Payments announcement, September 2026 (page dated 29 September; release text 30 September). The February announcement’s section “What does it mean for European end-users and European merchants” explicitly states the aim of enabling customers to use existing services across borders and giving merchants a European payment option that reduces dependence on international providers. The September announcement describes the common network as a concrete step towards European sovereignty. ENP is an established, equally owned entity based in Madrid; the announcement says technical implementation is being prepared, with cross-border person-to-person payments to precede e-commerce and point-of-sale phases. The approximately 130 million users across 13 countries belong to the participating services collectively, not to a fully connected new network. This industry-led initiative includes non-EU countries and is distinct from the proposed digital euro. It preserves participants’ brands and customer experiences while providing common interoperability. ↩ ↩²
European Central Bank, The Eurosystem’s comprehensive payments strategy, March 2026, printed p. 3. Explicitly connects dependence on non-European providers, geopolitical uncertainty and potential economic or political leverage. This is the Eurosystem’s stated assessment and strategic direction, not evidence that a specific payment cutoff occurred. European autonomy initiatives have longer histories; the source identifies increased urgency. Printed pp. 1–2 and 4–6 also bring existing infrastructure, the digital euro project and tokenised settlement into the strategy, distinguishing central-bank money, commercial-bank deposits and stablecoins. These involve different claims and governance; the digital euro remains a project. ↩
European Payments Initiative, Wero reduces its dependence on international providers, 27 April 2026. EPI's own account of European governance, underlying SEPA infrastructure and continuing non-European dependencies. Its statements about data protection and suitability of available providers are not independent technical assessments. ↩
QURKI, The alphabet soup of agentic commerce, and its Reference Map, Who is assembling the agentic-commerce market?, evidence checked 3 September 2026. The existing work examines how agents, platforms, wallets, networks and national payment infrastructure affect authority, access, obligation and value; the map records Visa and Mastercard's initiatives with maturity distinctions. The scenario in the body is QURKI's analysis of possible layered dependence, not an observed national loss estimate. The linked pieces provide the detailed explanation. ↩
Tobias Adrian, IMF, Tokenized Finance and Money, May 2026, sections on tokenisation, settlement assets and recipient countries. Shared ledgers and simultaneous asset/payment settlement can reduce reconciliation work and counterparty exposure; faster settlement also raises continuous liquidity and operational demands. The published account describes dollar stablecoins as lowering barriers to dollarisation, while recognising possible benefits for cross-border payments. A stablecoin is a private claim, not a direct claim on the Federal Reserve; maintaining its peg depends on its design, reserves and redemption arrangements. The inference about geopolitical influence is QURKI’s synthesis, not a claim that all tokenisation uses dollars or that every stablecoin serves US policy. ↩
Piero Cipollone, ECB, Europe and monetary sovereignty, 12 February 2026, sections on digital retail payments and digital finance; read with the March 2026 Eurosystem payments strategy. The speech identifies possible losses of bank fees, data and deposits, and the risk that dollar-based settlement could diminish the euro’s role. These are attributed prospective concerns, not established outcomes. Central-bank settlement of tokenised financial-market transactions and the proposed retail digital euro are distinct initiatives; the latter is not described here as issued or in public circulation. Domestic payment infrastructure and the currency or settlement claim it carries are distinct sources of dependence. ↩
European Central Bank, Eurosystem brings central bank money to tokenised finance, 21 September 2026. Pontes launched with an initial set of wholesale settlement services and onboarded participants; features and operating hours will expand, with full implementation expected by 2028. It is distinct from the proposed retail digital euro. ↩