Brussels, September 22, 2025: Open Letter - Guaranteeing Payment Sovereignty Through Open Banking — Why Europe Must Act Now
With this open letter, we explain why the EU already has the world’s most technologically advanced and resilient payment solution in place and what policymakers need to do to go the last mile and enable it to become a European household payment method that guarantees European payments sovereignty.
Europe stands at a crossroads with the evolution of retail payments. While our banking infrastructure is among the most advanced in the world - with instant transfers, the SEPA framework, and large online and mobile penetration - the checkout experience at the physical points of sale (POS), where still more transactions take place than online, can be outdated in places. Currently, many payment solutions are provided by international companies, which highlights the importance of strengthening Europe’s financial sovereignty and digital independence through innovative, homegrown solutions.
A strong alternative is already available: a European payment method based on open banking technology (often called “Pay by Bank”) that directly connects into each of the EU’s more than 400 million bank accounts, leveraging infrastructure which has just been built in the last few years. Not only does this payment method have better reach than any other, but it is built on modern technology (e.g. APIs) and thanks to its completely decentralised infrastructure, it is inherently resilient as there is no one central system or infrastructure that can be attacked.
If international payment schemes or digital wallets were suddenly restricted or made more costly for EU use, Pay-by-Bank would stand out as the ready-to-use digital payments alternative available across Europe. Pay-by-Bank provides consumers with greater choice. Consumers do not need to sign up to a new wallet/account or go through a new onboarding process but can pay directly from their existing bank accounts, while merchants can easily connect to it via their existing service providers.
While Pay-by-Bank is already up and running, a final legislative push is now necessary to complete the last mile. Through its second payment services directive (PSD2), Europe took the global lead in open banking, and it is now of utmost importance that its revision into PSD3 and the Payment Services Regulation (PSR) ensures that the few but crucial regulatory missing pieces are addressed, in order for this European innovation to fulfill its full potential.
This revision, in combination with instant payments, and the standardisation of payment journeys at POS are the building blocks of the Pay-by-Bank based European Retail Payments Framework (ERPF), which is promoted by the European Third-Party Providers Association (ETPPA). It presents a comprehensive path forward and enables direct, real-time transactions from consumer to merchant at POS without intermediation and associated fees, expanding the range of payment options available to both merchants and consumers and fostering a more competitive payment landscape.
Consumers can authorise payments via the method they already know and trust - their banking app. Merchants benefit from low-cost, instant and secure payments, with broad access to over 400 million users across all of Europe’s 4000 banks. This approach supports a diverse and competitive payments ecosystem, ensuring banks continue to play an important role in the digital economy while the European Union advances its strategic autonomy and fosters innovation in payment solutions.
The success of India’s Unified Payments Interface (UPI) and Brazil's Pix system are good examples of Pay-by-Bank successfully becoming a widely adopted alternative, giving consumers and merchants more choice in how they pay and get paid.
Closer to home, the British government in its recently issued National Payments Vision stated its ambition for open banking-based Pay by Bank to be developed as a ubiquitous payment method, and that it expects regulators to support this development. Open Banking in the UK is already being used by millions of customers and generates billions of API calls to access banking data. Parliament has also now passed the Data (Use and Access) Act which unlocks further financial data.
Indeed, Open Banking - pioneered in Europe over 20 years ago and first to mandate and regulate the topic - has become a global blueprint.
The EU should take heed. While the Digital Euro, and other new “closed banking” solutions such as the European Payment Initiative (EPI) and EuroPA are proposing a new “greenfield” approach, Pay by Bank is an open solution that leverages existing and modern infrastructures. It is available here and now and builds on European leadership in Instant Payments, Open Banking and APIs to ensure EU sovereignty, resilience and competition in the short and long term. The authorities should reinforce this development - which they pioneered - to ensure that Europe does not just follow others but leapfrogs into a future-proof world rather than trying to reinvent the wheel.
Click here to read the open letter.
