The EU enters the ring with Wero: PayPal competition or technical knock-out?

Online purchases, flight bookings, car rental payments or even quick transfers to friends - PayPal offers a simple solution to combine all these functions in one application. The American top dog is the undisputed number one online payment method. And yet there are regular attempts - especially by European financial institutions and service providers - to create a counter-model in order to capture the giant's market share. Giropay from Paydirekt, the latest major German attempt to overtake PayPal, has failed and is to be completely discontinued by the end of this year. With Wero - an initiative of the European Payments Initiative (EPI) - everything is now set to change. What are the prospects for success? And what functions does the new European payment model offer? We took a closer look at Wero and came to a clear conclusion.

European payment system Wero: What is the idea behind it?

The European payment system Wero launched in July 2024 and is intended to stand up to PayPal and other payment service providers. Wero was initiated by the European Payments Initiative (EPI), an association of 16 major European banks, including the Sparkassen Finanzgruppe, BBVA and KBC. The aim is to create an independent European alternative to the dominant US payment systems such as PayPal, Mastercard and Visa in order to strengthen European sovereignty in payment transactions.

Joachim Schmalzl, Chairman of the Supervisory Board of EPI, says commented: "The launch of Wero marks an important step towards strengthening Europe's financial independence. Our goal is to build the system sustainably and pave the way for a secure and efficient digital payment future in Europe."

The model for the implementation of the idea is the Swiss payment solution Twint, which has already successfully established itself in the Alpine republic.

Important for potential users: With the new app, private customers should be able to transfer money from one smartphone to another in just a few seconds - without entering an IBAN, but simply and easily in real time using a cell phone number or email address.

So far, so good. And what else? Unfortunately, the "wow effect" for users and online retailers has not materialized, as Wero outlines an extremely limited use of its services right from the launch. And this is precisely where the problem lies.

Serious competitor or early technical knock-out?

Currently, Wero only includes mobile transfers in real time from smartphone to smartphone. Online payments on the web, as well as payments in brick-and-mortar stores, are not due to be integrated until 2025 or 2026. Conversely, this also means that European users can currently only benefit from the application to a very limited extent. The majority of the functions are not available with the launch in July, which naturally raises the question of whether Wero has the necessary stamina to compete with other major payment service providers.

Conclusion:

First of all, Wero is building on a good idea: Reducing dependence on US corporations and foreign payment options while strengthening its own European payment transactions. The simple handling and fast processing of mobile payments are also interesting for potential users.

Unfortunately, however, the European initiative is and remains incomplete: Users and online merchants have no real added value from using or integrating Wero. The usage functions are very limited without payment in stationary retail or online on the web and a feature with a unique selling point is sought in vain.

It remains to be seen whether Wero can really hold its own on the market and whether the payment option will appeal to European users. However, an early technical knock-out is already looming due to the lack of functions and limited use.