European payments executives are developing at least three networks that would compete with the systems operated by Visa Europe and MasterCard Inc.
The Belgian retailer Colruyt Group is planning to begin testing the Payfair debit card at about five stores in October, with a broader rollout expected in 2010.
"We have several million cards to be issued potentially," said Dominque Buysschaert, the chief executive of European Payment Solutions, a Belgian transaction processor that is involved in the Payfair project.
Buysschaert and other payments executives said that they hope to offer merchants and consumers across the Continent cheaper ways to pay, without depending on companies with origins in the United States. The moves come as Europe is shifting to the Single Euro Payments Area, which offers a common electronic network that spans the Continent.
One of the proposed systems claims support from some of Europe's largest banks.
Deutsche Bank AG of Germany and the French banking companies Societe Generale and BNP Paribas are planning to roll out a card system called Monnet, which is named after a 20th-century French economist who was a key proponent of European unity.
"Monnet is an investment in innovation and in the independency of the European banks," Hermann-Josef Lamberti, Deutsche Bank's chief operating officer, said last month at a conference of central bank executives in Frankfurt. In October the banks expect to create a "project company" that will develop the framework for the Monnet system, he said.
Monnet is aimed at competing against what a board member of the Deutsche Bundesbank, Germany's central bank, earlier this summer called a "duopoly of the two international card companies."
Such views are hardly uncommon among European financial regulators, which have barred some cross-border transaction fees that are imposed by Visa and MasterCard, calling them and other card practices anticompetitive.
"A European network will go along with the political and economic agenda of the" European Union, said Adil Moussa, an analyst at Aite Group LLC. Part of the motivation behind these efforts is "nationalistic pride," he said, but creating a euro-centric payment infrastructure would also create jobs and "retain some of the wealth" that otherwise would go to U.S. companies and shareholders.
Another proposal is aimed at uniting some of Europe's numerous national debit networks (a Deutsche Bank spokesman said there are more than 18). The Euro Alliance of Payment Schemes, or EAPS, is expected to handle cross-border debit transactions in Europe, including card and automated teller machine transactions, from Germany, Portugal, Italy and the United Kingdom, among others. EAPS officials have said they hope to become Europe's largest card-acceptance network by 2015.
However, alternative payments networks will require significant time and effort to take off, and will have to compete against the well-entrenched card networks.
MasterCard said its brand appears on more than 195 million cards in Europe, and is accepted at 8.6 million merchant locations in the region.
"MasterCard feels confident to be well positioned," Bernhard Mors, a company spokesman in Europe, said this week. "What we observe is that the vast majority of our customers take a mid- to long-term view of their payments business, are appreciative of partnerships that [add value] to their business and invest appropriately in areas such as EMV, innovative payment technologies such as contactless, and merchant acceptance."
Visa Europe spokeswoman Natalie Kelley wrote in an e-mail that "member banks have made significant investments in Visa Europe's payment system in recent years." Her company is "aware of a number of proposed new schemes in Europe but we have yet to see any evidence of their entry into the market. To create new payment schemes would require significant investments in a very tough economic climate."
Gwenn Bezard, a research director at Aite Group, said that the weak economy may make banks reluctant to invest the capital needed to launch an alternative payments network. "It could be very expensive in this economy," he said.
History suggests that the plans, despite recent optimism, will struggle in the early going. Bezard pointed out that the drive toward Sepa has been sluggish.
"You look at Sepa, it's been going for years," he said, and any new card systems might need a decade or so to gain their footing. Payfair, for example, had initially wanted to start its Belgian trial in 2009 and has yet to announce major support from banks.
One possible route for a new card plan is to land a cobranding deal with the major international networks, said Terry Xie, the director of Mercator Advisory Group Inc.'s international advisory service.
But that might be a tough sell for European regulators, and certainly for European merchants such as those represented by EuroCommerce. The Brussels trade group regularly rails against the big card brands as it lobbies for a fixed-rate pricing plan for card transactions.
Under Payfair's business model, merchants would pay lower transaction fees compared with those for MasterCard and Visa, Buysschaert said. Payfair merchants would pay extra for additional services such as an authorization fee, but only if the retailers want them.
Xie said European banks would have to consider the revenue they might lose from supporting a lower-cost card brand. "Banks like interchange," he said.
For now, executives backing the alternative proposals can take at least vague encouragement from European banking authorities. Gertrude Tumpel-Gugerell, a member of the European Central Bank's executive board, recently said that consumers and merchants would benefit from more payments competition, though the central bank would not discuss any specific ideas.
