As Europe's proposed alternative to Visa and Mastercard takes shape, evidence from Russia suggests that an upstart rival can break the American giants' duopoly - if government is prepared to put its finger on the scale.
The European Central Bank has long-floated the idea of a home-grown cross-border scheme capable of taking on Visa and Mastercard.
Last year, a host of the continent's banks finally unveiled plans to take action through the European Payments Initiative (EPI), which promises a unified pan-European payment system, offering a card for consumers and merchants across Europe, a digital wallet and P2P payments.
While the task of eating into Visa and Mastercard's dominance is daunting, figures from Russia show that it is possible.
Russia set up the Mir national payments card network in late 2015 at the behest of President Vladimir Putin in response to US and EU sanctions over the annexation of Crimea, which saw MasterCard and Visa cut off services to several of the country's banks.
According to GlobalData, as of 2020, 74.6 million debit cards have been issued by Mir, representing 28.62% of all debit cards in circulation. Mir’s market share is now 25.3% in terms of transaction value.
However, this has required heavy state intervention of the kind that Europe seems unlikely to follow.
Russia's government passed mandates requiring public sector employees receiving state funds and welfare benefits to migrate to Mir payment cards. A similar mandate was imposed on pensioners.
Meanwhile, merchants with annual transaction turnover of more than RUB40 million ($0.5 million) are required to accept Mir cards. The threshold was reduced to RUB30 million in March and will drop to RUB20 million in July.
Chris Dinga, payments analyst, GlobalData, says: “Governments can introduce payment schemes and take over the domestic transaction landscape by driving adoption via mandates and regulation. Indeed, this could be the model the European Commission follows when it launches its own payment scheme".