A new report by the Emerging Payments Association EU (EPA EU) and The Paypers reviewed Europe’s payments markets, ranking the key players according to their place in the value chain and several financial indicators.
The report, commissioned by Luxembourg for Finance, goes beyond the pan-European well-known trends of increased digitalisation and decreased cash usage and dives into how the different national, political, and economic pressures influence the payment landscape within regions of Europe.
It said that the payments sector in the EU is going through a profound change by integrating the fields of credit and loyalty schemes. At the same time, major players are making acquisitions consolidating the European market. Consequently, regional champions are emerging between the global players and the fragmented local operators.
Highlighting some ket trends, the report said that payment companies are increasingly integrating alternative services and data sources such as loyalty schemes, discount offers, and credit services. By using transaction information of buyers and sellers to do risk profiling and scoring, parties like PayPal or PayU are able to provide instant lending services to facilitate payment transactions.
Furthermore, with Europe’s incumbent financial system under threat from BigTech players within the payment space, large traditional banks and payment service providers are being forced to expand their service offerings. For instance, Italy-based payments service provider Nexi Payments acquires SIA, a European payment processor and interbank network provider to ensure it stays ahead in the FinTech sector.
In terms of regulation, PSD2, the European directive regulating payment services, is a key enabler of evolution in both payments and identity: it allows the two to be united in a single service and increases consumer confidence, therefore facilitating the adoption of online payment methods as well as online identity services.
Commenting on the report, Luxembourg for Finance CEO Nicolas Mackel said, “For Europe’s financial industry to compete in the disruptive digital era, local networks and solutions need to be frictionless across the continent. This is even more important as we emerge from the pandemic as more consumer and transactional activity shifts online.
“We must now come together and unify as a region, rather than continuing with the mosaic of different payments systems we currently see across the EU. The payments sector is hitting critical mass and cooperation and consolidation is the sensible way forward. The introduction of PSD2 is already helping to encourage further cross border expansion, and this research identifies the major emerging trends.”
Echoing a similar sentiment EPA EU general manager Thibault de Barsy added, “In such a differentiated market, our research, which presents an innovative strategic review across Europe’s individual payments markets, provides the perfect basis to monitor how national, regional and global players are progressing.”
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