Wero is coming
Did you know that each time you use a payment card there is a cost to the merchant? Did you know that it costs even more if your card is a Premium MasterCard or Visa? It also costs the business more if your card is from outside the EU or if the card is of a professional nature but there is no additional service provided to the merchant.
For each transaction the shop, service provider or restaurant pays between 1.5 and 5% depending on the card used. And it’s the little guy that pays the most since there are volume discounts! Sure, everyone benefits from the ease of using a card as opposed to cash, but do you realize how much it is costing you and the business accepting the card? And that the cost of the service is higher just because the card is a different color? Visa and MC charge the merchant more for the same service if your card is of a higher grade. Plus a lot of cards charge YOU for foreign transactions. When you think about the trillions of transactions by card each year it sure adds up to a lot of geld for the card providers. According to the European Central Bank, card payments made up 56% of all cashless payments in the EU in 2024.
If you extrapolate your monthly or annuals costs down to a per diem you’ll realize you are paying 1, 2 or 3 euros per day just to have that card in your wallet or phone.
Visa and MasterCard have a Duopoly on card payments and the costs to the user continue to increase, rising 25% since 2017 with the additional revenue primarily driving profit growth rather than innovation and security. Did you know that Visa has a 60% margin?
Keep an eye out for the arrival of Wero, the new trans-European payment solution, set to compete with Visa and Mastercard. Currently, these two dominate the market, dictating prices to businesses with minimal returns beyond basic services. This monopoly makes it hard for merchants to find better deals or other options. Additionally, Europe’s reliance on US-based financial infrastructure raises concerns about data sovereignty and strategic autonomy. The European Payments Initiative (EPI) and its brand, Wero, aim to unify Europe’s payment systems, offering solutions for online, in-store, and person to person (P2P) transactions via mobile number and email. P2P transactions are available now and online and in shop will be for later in 2025 and 2026.
With Wero transactions will be simple, fast and less expensive. The fees and data will stay within Europe. The only bad thing about Wero is the name: Wero, is made up of « we » and “euro”. Oh well.
It is also worth noting you and the merchant pay a lot less for instant bank transfers than for Visa or MasterCard so they are a good option and it is often available for online transactions too.
[By the way American merchants have started pushing back against the high costs of Visa and MC by adding the credit card fee to each transaction and making the consumer pay. So beware if you travel to the USA. Your dinner in a New York restaurant might look good at 50$ but the City Sales Tax rate is 4.5%, NY State Sales and use tax is 4% and the Metropolitan Commuter Transportation District surcharge is 0.375% for a total additional cost of 8.875 percent, then they will add 3% for paying by card and expect at 20% tip! Suddenly dinner inflates to 67$! Extra caution should be used in the five states with the highest average combined state and local sales tax rates which currently are Louisiana (10.12 percent), Tennessee (9.56 percent), Arkansas (9.46 percent), Washington (9.43 percent), and Alabama (9.43 percent)! Do note that the beautiful states of Montana and Oregon do not have sales tax. Oof. But then there might be resort tax …]
Let’s start thinking twice about how much we are paying financial institutions each time we pull out our cards or wave our phones and we’ll save ourselves and our merchants some dough.
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