In January, President Trump’s belligerence and unpredictability led European countries to reevaluate their military dependence on the United States. With the fall-out over his Greenland threats and also the operation against the Venezuelan government, it was an excellent month for weapons and aerospace companies in France and also the UK.
Since then, attention has shifted to tech as another aspect of dependence on the US. Dutch reports found that the Dutch government uses more Microsoft systems even than the US government, and that its institutions from healthcare to transport and local government would cease to operate if shut out from US cloud providers.
The French government signalled that based on security concerns it will move away from using Zoom. And a European Commission source leaked to the Wall Street Journal that it will soon be announcing tech sovereignty directives.
Much of this sounds relatively toothless. It may just lead to tangible support for a Europe-based Twitter alternative, called W, and also the French-based AI company Mistral.
But where the shift does have bite is in payments. Since 2005 the Netherlands has operated the iDeal online payments system in preference to Visa and Mastercard. In fact, even the country’s major supermarket chain does not accept Visa or Mastercard.
How does iDeal work? Via a QR code and banking app, online purchasers make a direct-to-vendor transfer, rather than routing the money through Visa or Mastercard. The system saves the Netherlands approximately €600 million annually.
This year, a payment system modelled on iDeal and called Wero is set to roll out across the EU. The idea: scanning a QR code at check-out will prompt the user to enter a PIN or biometric verification. Again, the money goes direct to the vendor, with no intermediary.
Will Australia get in on the act? Well, probably not. The prospect of seeing ourselves as independent from the US is even more remote than it is for continental Europeans.
But should we? Visa and Mastercard currently process some 85% of card transactions in Australia, which in turn make up about 90% of all transactions.
With merchant fees sitting at around 1.4% according to a 2024 RBA report, that’s a staggering amount of money being given away, and if tech sovereignty continues to be a buzz word it’s a very big prize for someone to take a shot at.
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