Payments: A New Sovereignty Challenge

The growing importance of payment sovereignty Payment sovereignty is becoming an increasingly significant issue around the world, driven by rising geopolitical tensions, economic sanctions, and the growing influence of major global technology giants. These shifts are occurring as the market itself has changed over the past decade. On the one hand, we see the rise of cryptocurrencies, stablecoins, and digital wallets like Apple Pay, Google Pay, and WeChat Pay, and on the other, the increasing dominance of major international payment networks. The growth of these entities is altering the balance of power and forcing both private and public actors to adapt. Meanwhile, numerous innovations are reshaping the customer journey. For instance, instant payments, which enable secure, real-time transactions, are gaining traction and are likely to become the new standard that consumers expect. Open banking, which encourages the sharing of banking data between authorized players is paving the way for innovative and personalized financial services.

Antoine Laronze-Groine

Antoine Laronze-Groine

Phygital Payment Director

In February 2023, I joined Linxens as the Director of "Phygital" and "Responsible" Solutions after spending over 15 years at a global leader in payments, occupying various marketing and innovation roles. I had the chance to be involved in all the migrations that have reshaped the payment card industry, from EMV to contactless and digitalization. I am supporting the revolution in financial services by developing disruptive experiences that make people's lives secure, responsible, and simple.

The time to act is now

Faced with these shifts, countries and regions around the world are strengthening their payments sovereignty and adapting regulations to harness innovation, protect their interests, and protect those of their businesses and citizens.

For any country, it is important to anticipate and support these changes is necessary—not only to preserve autonomy but also to seize new opportunities that could drive economic growth and encourage the emergence of local or regional champions.

Globally, almost all central banks are working on digital versions of their traditional currencies. These Central Bank Digital Currencies (CBDCs) are strategically important for anchoring traditional money in a tokenized world, but they also offer an opportunity to improve digital financial inclusion.

The European Response

In Europe, one of the flagship projects in the quest for payment sovereignty is the Digital Euro, a European Central Bank (ECB) project currently in its experimental phase. Banks and other financial institutions are expected to be key partners in this process, helping to shape a more efficient and secure payment landscape that meets the needs of citizens. By the end of 2025, we should know whether the Digital Euro will be officially launched.

Other initiatives also aim to create a more sovereign payments environment. The European Payments Initiative (EPI), launched in 2020, is a major effort led by France, Germany, and Belgium. This collaboration has led to the creation of a new digital wallet, WeRo, which has recently been launched in France. This new service replaces Paylib and will gradually integrate 15 million users from the French market. WeRo is already available in Germany and will soon be extended to Belgium, the Netherlands, and Luxembourg, marking a real step forward towards a pan-European payment platform.

Across Europe, similar initiatives such as Bizum in Spain (27 million users), Bancomat in Italy (37 million users), SIBS in Portugal (5 million users), and Swish in Sweden (8 million users) demonstrate a strong local sovereignty dynamic open to wider European cooperation. The agreement announced earlier this year between Bizum, Bancomat, and SIBS to ensure the interoperability of their mobile payment solutions highlights the ambition to achieve both independence and a seamless user experience.

In France, this ambition has been reaffirmed by the National Committee for Payment Methods, which has drawn up a new strategic plan defining the priorities for the French payment ecosystem over the next six years, emphasizing attractiveness and sovereignty as key objectives. The Carte Bancaire (CB) network is also making progress in this direction, as evidenced by the update of its logo to reflect the French national colors.

Building regional electronic supply chains as a pillar of payment sovereignty

According to Capgemini, the volume of digital transactions reached 1,411 billion in 2023 and is projected to hit 1,650 billion in 2024, and even 2,838 billion by 2028. Given that the majority of these global payment transactions are made using bank cards (57% of global transactions in 2023, according to Capgemini), maintaining control over infrastructure and autonomy is critical.

Efforts to create an independent and resilient industrial system based on regional supply chains for card development and manufacturing are crucial. These systems must be able to address both current technological and economic challenges, involving all actors along the value chain.

In this respect, the European Union's efforts to reindustrialize the electronics sector are significant. The EU aims to capture 20% of the global semiconductor production market by 2030. However, this ambition must be complemented by targets in advanced packaging and integrated circuit substrates, where the EU currently holds only 2% and 1.3% of the market, respectively, according to the international association IPC. Many regions of the world live in "technology hotels," where, as the journalist Tariq Krim aptly put it, "they own nothing, they rent everything." A key challenge is to consolidate payment systems based on what regions really own, in order to reduce supply risks and build resilience to global crises.

Payments at a critical juncture

Payments are becoming a strategic sovereignty issue for every region of the world. Public and private initiatives are multiplying to counter the influence of GAFAM and other international giants. This independence will be achieved through the ability of these actors to nurture new leaders, deploy innovative offerings, and foster strong regional roots. They are innovating, researching, investing, and legislating because the stakes are high, and the time to act is now. The prize: technological and industrial independence, increased competitiveness, and increasingly seamless and secure user experiences.