When it comes to key innovations, Europe is in danger of being left behind. From areas such as artificial intelligence and electric vehicles, through to digital payment methods, we need to ensure that Europe keeps up the pace with American and Asian innovation and establishes its own solutions. Whilst we observe great enthusiasm for innovations and new developments in the Americas and the Asia region , in Europe, we tend to first look for reasons as to why innovations might fail and discuss these extensively instead of focusing on implementation.

In this context, we should explore the two key European developments in payment solutions: the digital euro, developed by the ECB, and the European Payments Initiative (EPI), which will go to market with the launch of its first solution under the „wero“ brand in Germany, France and Belgium in the coming weeks. Both initiatives have come under scrutiny: the market for digital payment solutions in Europe is saturated – international card networks, and Fintechs such as PayPal, dominate alongside national payment systems rendering other payment methods redundant and ultimately resulting in the majority of payments in physical stores and e-commerce being processed using innovate non-European payment solutions.

To strengthen Europe’s sovereignty, we need a competitive, authenticEuropean payment solution. The digital euro and EPI have very similar objectives and cover the same use cases. So why not make use of the obvious synergies between the two initiatives?

I’m firmly convinced that only a joint solution between the ECB and the private financial sector can result in a compelling European payment product. If we want to strengthen European sovereignty in digital payment solutions – which should be the key mutual objective – the digital euro and the European Payments Initiative need to work together closely in the form of a „public-private partnership” creating an efficient and secure payment system that is to the benefit of consumers in Europe.

The conditions for this are in place: the ECB as a central bank has the task of promoting the smooth operation of payment systems, which should certainly be seen as a call for cooperation with the private financial sector. EPI, together with the participating banks from Germany, France, the Netherlands and Belgium, will already be enabling instant payments between the bank accounts of European citizens via „wero“ wallets later this year. In 2025 E-commerce payments will follow, complimented by bricks and mortar payments thereafter. The common goal of creating a European payment system therefore appears to be within reach.

By 2028 at the earliest we expect the ECB’s digital euro to be launched – which doesn’t just envisage digital central bank money as an alternative to cash, but also as an additional digital instant payment system for account-based payments. The synergies and major overlaps between the two solutions should be exploited to avoid significant redundant investments for all those involved – the ECB, financial service providers and merchants.

The fundamental question of which consumer problem the digital euro or EPI is intended to solve in the first place is a legitimate one. Looking beyond Europe’s borders, though, digital instant payment methods between bank accounts, without the use of card payment systems, can successfully set standards both in domestic and cross-border payment transactions. Whether „twint“ in Switzerland, bank driven Nordic instant payment methods,or Asian solutions such as PayNow in Singapore or UPI in India – account-to-account payment methods have proven to be successful and are regarded as an important and achievable innovation in the global payment market. The EPI and the digital euro enable account-to-account payment transactions and should work more closely together to both think about innovation, in this new and up-and-coming payment method, on a European level as well as develop this mutually together.

Looking forward to 2028, what might a partnership between „wero“, and the digital euro look like? Burkhard Balz, a member of the executive board of the Bundesbank, sees EPI as „a natural partner of the digital euro“ and a meaningfuldistribution channel.

Public support from central banks is necessary and welcome. However, so far there has been little direct cooperation between the two projects. The integration of the digital euro into the wero wallet seems plausible – EPI would then become the „carrier“ for the digital euro and „wero“ users wouldn’t need to use a different app for payment transactions in the digital euro system. This would also avoid multiple investments in different wallets that offer the same possible end customer use cases.

But it shouldn’t just be EPI’s „wero“ front-end integrations, it would also be accretive to coordinate the back-ends of the two new European payment infrastructures. On the one hand this affects the rules and framework for the payment systems and on the other hand it also impacts the infrastructure through which payments are processed via EPI and in digital euros.

The use of existing instant payment infrastructure is proving to be a key success factor, both for the digital euro and for private sector initiatives such as EPI. In TIPS – the euro system’s service for settling instant payments – we already have a suitable solution for instant risk-free interbank transaction processing in secure central bank money. TIPS should also be used for processing digital euros – instead of a planned additional instant payment infrastructure just for the digital euro. In this context, it should also be noted that the interoperatbility of TIPS with other instant payment systems has already been realised, including but not limited to RT1 EBA Clearing as well as further local systems.

The ECB has been strategically developing TIPS as the central infrastructure for instant payments for years: the recently passed European law on the mandatory offering and acceptance of instant payments by European banks further strengthens the use of the payment system. Payments settled instantly via TIPS, RT1 or local real-time sytems, should become the new standard in practice and strategically replace slower SEPA classic payments. New regulations and initiatives as regards to linking up with other instant payment systems, or the use of TIPS in the parts of Nordics outside of the EU, also enable the use of TIPS for international, cross-border payments.

Payments between „wero“ wallets use existing payment systems such as TIPSand thus the ECB’s strategic infrastructure. New laws, regulations and opportunities to use TIPS for international payment settlements practically require banks and payment institutions to invest in the existing payment infrastructure. It’s hard to find tenable reasons that would oppose the use of TIPS for the settlement of digital euros as well.

An open dialogue and fruitful collaboration between the digital euro project and EPI would help to drive innovation in payments. Close collaboration between the central bank, merchants and payment service providers is a prerequisite for both the digital euro and EPI to be successfully implemented.

In a saturated European payment market neither solution will be a sure-fire success without the support of wide scale adoption and usage.. People very rarely ask when they’ll finally be able to pay in digital central bank money or through account-to-account payment methods. They simply want to be able to pay digitally without any difficulties. It is up to us to create a meaningful European payment infrastructure that does not waste public budgets or private investments.

We have the power to create new solutions in the European financial sector, act as pioneers and establish innovative payment methods. Close cooperation between EPI and the digital euro project, aimed at an integrated solution for the digital euro and the wero wallet, combined with the use of the TIPS strategic instant payment infrastructure, represents an extremely promising way to realise a new, pan-European payment infrastructure.