Payments and the Eurozone

I’m in the Netherland today, talking to financial institutions about Payments.  Since the Euro was introduced in the EU, the challenge for payment processors has been pretty clear: how do you become the lowest-cost processor of Euro-denominated payments in the world?

Standardisation across multiple countries creates opportunities and threats.  Whether you’re talking about games software, electricity plugs and sockets or payment processing, the issue is the same Economics 101 issue as always: economies of scale.  If you are not processing a greater volume of payments transactions than any other payment service provider, then you are losing.  That’s as fundamental a law as gravity.

So what has changed since the Euro was introduced?  - because, after all, the Euro has been with us for 11 years now.  Which payments processor dominates in the Eurozone?  Let’s not get too confused about whether they are corporate payments, Internet payments, mobile payments – we’re in a world where a serious differentiator may not be the shape of the terminal because they all end up using the public Internet.

In similar situations, market feedback tends to be “we don’t want a monopoly” – but also tend s to be “we don’t want fragmentation”.  Two providers?  Three providers?

So who among the established payment processors is going to win this race in the real business world?  Or do we see a new market entrant coming in from the blind-side ?