Europe should reduce its reliance on US payment systems as the prospect of a Trump presidency increases risks around the critical infrastructure’s resilience, the chief executive of Stripe-backed UK tech group TrueLayer has warned.
Francesco Simoneschi told the Financial Times that building more resiliency in European payments had become increasingly urgent in light of the upcoming US presidential election.
“Maybe [the US election] is an election that will take us a little bit into a different world,” said Simoneschi, who heads the London-based open banking company. The TrueLayer chief added that one risk would be a shift away from the “integration that has been happening between UK and Europe and the US” in the past 50 years.
“A big portion of payments in Europe and the UK [relies on] US companies, that’s the reality. This critical infrastructure is so stacked from a US standpoint that you may be the target of global actors having a go at that infrastructure.”
The need for independence had been made all the more evident after a global IT outage in July caused by tech company CrowdStrike showed the risks of over-reliance on a single technology, he said.
Simoneschi’s comments come at a time when competition in the UK payments market is under increased scrutiny.
The Payment Systems Regulator is probing the fees charged by Visa and Mastercard, a duopoly that accounts for 95 per cent of all debit and credit card payments in the country. Mastercard also owns Vocalink, which powers the country’s faster payments scheme, which processes bank transfers.
TrueLayer, which was valued at more than $1 billion (€904 million) in a 2021 fundraising led by Tiger Global, has announced a series of partnerships for its “pay by bank” solution, which allows customers to make online purchases without going through Visa and Mastercard.
Proponents of pay by bank technology argue it will disrupt ecommerce by allowing consumers to make purchases without having to type out their card numbers, and that it will give retailers a cheaper alternative to Visa and Mastercard, which have increased their fees in recent years.
Simoneschi said Europe had “woken up” to the urgency of building payment independence such as through the European Payments Initiative, a pan-European card scheme backed by banks to allow bank transfers and digital wallet transactions.
Open banking was seen as a big promise for UK fintech when it was mandated by competition authorities in 2017. However it has since struggled to achieve mass adoption and break the duopoly of Visa and Mastercard.
Copyright The Financial Times Limited 2024
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