"When MobilePay first launched in Denmark, all transactions were funded by a credit or debit card. Today transactions from Danske Bank and Nordea are using account-to-account payments. And, for most people, it doesn’t make any difference." Kristian T. Sørensen, partner at Norfico, says.

The European Union’s ­Payment Infrastructure Is Changing, but Most Users Will Not Care

Given the ubiquity of the internet and the wide adaption of smartphones, a new arena for digital- driven payment services has arrived. While this has created a broad ecosystem for consumers to dive into, infrastructure providers are moving in the opposite direction.

“The front-end is being increasingly fragmented as new solutions and services are surfacing, and we’re seeing consolidation on the back-end. Consolidation, with fewer and better players, is the key word,” explains Michael Juul Rugaard, partner in the financial consultancy Norfico.

Recently, the French giant Worldline acquired the Swiss company Six Payment Services in a $2.75B deal to grow its reach. For its part, the Scandinavian competitor, Nets has been consolidating its interests with Concardis from the German and Polish online payment provider Dotpay/eCard.

The tech giants are coming

At the same time, tech giants like Apple, Facebook, and Google are taking a swing at payments. This will, undoubtedly, play a role in the payment market, where Rugaard suggested they will aim at data and customer relations. More likely than not, they will also partner with the infrastructure providers instead of challenging them.

This might hit credit card companies like Visa and MasterCard hard, especially if the new players decide to bypass the card schemes by initiating payments directly through accounts. After all, Europe’s revised payment service directive, PSD2 now allows this within member countries.
“If Apple Pay chooses to replace card payments with PSD2 access in the core belly of their solution, it might threaten Visa and MasterCard. Of course, it isn’t something that will happen overnight, as the payment terminals are currently built for the card infrastructure. But, over time, the new solutions might change their infrastructure provider without consumers even noticing,” Rugaard says.

Most users will not care

Sure, infrastructure giants might consolidate, the physical credit card might move into your smartphone as an e-Card, and PSD2 might offer new payment opportunities. But, for most users, those changes won’t even be noticeable – let alone worthy of care.

“When MobilePay first launched in Denmark, all transactions were funded by a credit or debit card. Today transactions from Danske Bank and Nordea are using account-to-account payments. And, for most people, it doesn’t make any difference. They still experience the money being transferred and 100 kroner vanishing from their account,” Kristian T. Sørensen, partner at Norfico, says.

When people are asked how they want to pay in the future, they will say Apple Pay or MobilePay, not Visa or Dankort.

“Consumers will feel they are paying with their wallet containing the payment instruments. For that reason, the payment engine will become less important,” Sørensen concludes.

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