Comment by pimeys
16 hours ago
In EU we have multiple national systems, but now they are trying to unify them to the IBAN system, so you can pay in the same way by opening your bank app and scanning a QR code:
My bank (N26) should support this later this year. I hope it becomes as big and successful as Pix.
Wero sounds similar to the US Zelle system but the big reason for that to exist in the first place is that bank account numbers are not safe to share in the US since they can be used to pull payments so there was never an option for easily transferring money to friends and family other than writing a cheque.
In the UK and Europe I could just share my bank account number or IBAN and make payments through online banking since the late 1990s (though in the UK they only became instant in 2008.) So Wero sounds like a nice convenience but much less of a game changer.
It will be interesting to see if it manages to expand to goods and services since the EU strictly regulates the fees Visa and Mastercard can charge there so there is less incentive to switch than in some other countries.
Sharing banking information is not safe in Europe, decades ago a phone scammer convinced me to give them my information and they were able to pull money from my account without any permission from me whatsoever, they just acted like I already signed up to their scam service when I never did. That was a completely foreign and insane idea to me (and it is still insane and should not be allowed) that someone can simply withdraw money from my account. They sent me some contract in the mail that I had to apparently reject and otherwise it was automatically approved. Which itself is surely also not legal but the point is that they were able to take money from my account just with my information.
"decades ago"
Granted, I'm mostly familiar with the Scandinavian bit of Europe, but you can't do jack shit with banking without 2FA which is tied into the national population register.
They decided in the 80ies or 90ies that "relying on knowing secret fixed magic numbers" was not ideal for authenticating people, and sat down and worked out solutions to that problem.
In the UK direct debits don't require 2FA (but do require approved forms either online or on paper) but you can also very easily get a refund for any direct debit taken from your account so I assume it's simply not worth the scammers' time.
The way SEPA direct debit mandates work is absolutely mind boggling.
You'd expect it to work like Paypal, where you have to sign in to your account to authorize the direct debit mandate and also have the option to revoke it there.
No, the way it works is that you have to print out a form, fill it out and send it to the payee who you are granting the direct debit mandate, e.g. your landlord. Your landlord then sends a copy of the direct debit mandate to your bank and the bank authorizes direct debit payments immediately without asking you.
If you want to revoke the direct debit mandate, you have to send a form to your landlord that you want to revoke the direct debit mandate.
This is mindbogglingly stupid, since the payee has no obligation to process your revocation immediately and can take their sweet time.
Canceling a direct debit mandate has no impact on your obligation to pay rent. It makes no sense that you have to inform the payee and let them gatekeep the revocation. It also makes it possible for unscrupulous people to request a direct debit mandate without your knowledge.
I think the biggest reason is sovereignty: we cannot risk US cutting our payment system if they for example don't give Greenland for them.
I think this is the biggest reason to ensure you can pay with a local system in shops and restaurants.
That's a very reasonable concern, though given how central Visa and Mastercard are I suspect it is probably necessary to regulate their structures within the EU so that intra-EU payments are not reliant on non-sovereign infrastructure.
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To be pedantic, IBAN isn't a payment system, but only an identifier. It's like an IP address - you still need to enlist the services of an ISP to reach it, and that ISP has to find an actual route and send packets over actual cables.
Wero is just another private company trying get their cut of payment fees. You can do the same thing with SEPA Instant Payment (or some member states outside of the Eurozone have their own similar thing).
I don't see why Wero should exists, their business model seems like "trying to get money for the same service you can get for free".
Wero does several things. You can already send instant payments if you fill out IBAN and such, but entering order numbers, account references, and other such cruft for purchasing products is a pain. Companies receiving such payments also need to connect payment to a user and update their digital processes somehow. Wero offers such a solution so you don't have to find a PSD2 processor (which will probably cost just as much).
For interpersonal transactions I don't really see the advantage here, but for commercial use cases it's got a solid product and purpose.
Wero doesn't stand to benefit much from payment fees as European payment fees are already rather slim compared to, for instance, American ones (crazy things like percentages of purchase price with a minimum amount!).
wero is a european initiative set up by a consortium of banks that is built layered upon instant payments. it's not a private company like paypal or visa, its an attempt at making European payment infrastructure
Sweden has a similar "initiative" set up by a consortium of banks (Swish), as do many other European countries.
Usually these systems raise their fees after being established, sometimes even higher than Visa/Mastercard.
Brazil's Pix is something else. It wasn't created by private entities to make money.
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I couldn't have said it better. I don't understand what they solve.
We need instant, free SEPA transfers around the clock. Switzerland is not part of SEPA but IBAN is used so it is trivial to send payments to foreign accounts that have an IBAN.
I always say that the day Trump decides to block Visa/MasterCard outside the US is the day we get instant payments and finally get rid of cards.
SEPA instant already exists. I think it guarantees sub-10s transactions. Unfortunately it is not the default.