Stripe-backed fintech warns of over-reliance on US payment systems

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Europe should reduce its reliance on US payment systems as the prospect of a Trump presidency increases risks to the resilience of critical infrastructure, the chief executive of UK-based Stripe-backed technology group TrueLayer has warned.

Francesco Simoneschi told the Financial Times that building greater resilience in European payments has become increasingly urgent in light of the upcoming US presidential election.

“Maybe (the US election) is an election that will take us a little bit into a different world,” said Simoneschi, who runs London-based open banking. The TrueLayer boss added that one risk would be a shift away from “the integration that has taken place between the UK and Europe and the US” over the past 50 years.

“A lot of payments in Europe and the UK (are based on) US companies, that’s the reality. This critical infrastructure is so stacked from the US point of view that you could be the target of global actors who have a go at that infrastructure.”

The need for independence became all the more apparent after a global IT outage in July caused by technology company CrowdStrike showed the risks of over-reliance on a single technology, he said.

Simoneschi’s comments come at a time when competition in the UK payments market is under increased scrutiny.

The payments regulator is looking into fees charged by Visa and Mastercard, a duopoly that accounts for 95% of all debit and credit card payments in the country. Mastercard also owns Vocalink, which powers the country’s Faster Payments scheme, which processes bank transfers.

TrueLayer, which has been valued at more than $1 billion in a 2021 fundraising led by Tiger Global, announced a series of partnerships for its “pay by bank” solution that allows customers to make purchases online without going through via Visa and Mastercard.

Proponents of bank payment technology say it will disrupt e-commerce, allowing consumers to make purchases without having to enter their card numbers, and that it will give merchants a cheaper alternative to Visa and Mastercard, which have increased their fees in recent years.

Simoneschi said Europe had “woke up” to the urgency to build payments independence, such as through the European Payments Initiative (EPI), a pan-European card scheme backed by banks to enable bank transfers and digital wallet transactions.

Open banking was seen as a big promise for UK fintech when it was mandated by competition authorities in 2017. However, it has since struggled to gain mass adoption and break the Visa and Mastercard duopoly.