Wero set to disrupt European payments

The European Payments Initiative (EPI) is launching the first iteration of its digital wallet Wero in France, Germany and Belgium this June. 

Backed by 16 European financial services providers – including BNP Paribas and Deutsche Bank – is designed to be a mobile app that ensures swift and convenient A2A transfers across Europe.

The project is a long time coming, with EPI first formed in 2020 to solve the problem of multiple account-to-account solutions in European countries.

Read on for an overview of what Wero is and how it’s set to disrupt the European mobile payments landscape.

What is Wero?

Wero is an instant payments solution that uses SEPA rails to send funds via mobile app. It’s a pass-through digital wallet, which will exist in two forms: a layer on top of existing banking apps and a standalone mobile app (on iOS and Android).

Wero will ultimately offer several fund transfer options – P2P and P2Pro transfers, ecommerce payments, and point-of-sale (POS) payments – set to launch in phases over 2024 and 2025. 

Use cases for Wero include: one-off payment, one-click checkout, scheduled payment, merchant installment plan, and subscriptions.

How does Wero work?

Wero is an account-to-account (A2A) solution, meaning that transfers will go through almost immediately once approved. It follows the SEPA Instant Credit Transfer protocol established by the European Payments Council in 2017.

Users will not hold a separate balance on their Wero account, rather, they can only transfer funds to and from their linked bank account. Wero users must hold a bank account with one of the EPI shareholder subsidiaries to use the service.

In a similar manner to PayPal, Wero users can open their mobile app, select a payee, and send their chosen funds amount with a message (and emojis). The payment is strongly authenticated because of its connection to the payer’s mobile device. So authentication can take place through the user’s banking app. 

It is not yet clear exactly how Wero’s technology will integrate with payment processors, as API documentation has not yet been publicly released.

Wero payment disputes

EPI seeks to include “state-of-the-art consumer protection” with mechanisms in place for pre-dispute, dispute and chargebacks on Wero. Details are not yet available for the exact processes.

Who are Wero’s financial partners?

The European Payments Initiative (EPI) has partnered with the following institutions to build out Wero:

• ABN Amro
• Belfius
• BNP Paribas
• Crédit Agricole
• Crédit Mutuel
• Deutsche Bank
• Raiffeisen- und Volksbanken Gruppe
• Groupe BPCE
• ING
• KBC
• Sparkassen Gruppe
• La Banque Postal
• Nets (part of Nexi Group)
• Rabobank
• Société Générale
• Worldline

The group represents access to 75-85% of banking customers in Germany, France and Benelux (Belgium, the Netherlands, and Luxembourg), according to EPI. 

EPI also acquired iDeal and Payconiq in 2023. The group is also cooperating with giropay as it brings Wero to market.

How do users access Wero?

Wero users access the mobile payment app though one of two ways: through their Wero partner banking app or via the standalone Wero app.

How does Wero compare to existing mobile payment apps?

Wero is similar to other digital wallet apps in that its payments are tokenized, adding a layer of security not present with chip-and-pin or MOTO card use, for instance. So many of the same benefits of accepting digital wallet payments apply to Wero, as well. One of these being the potential to fall under lower SCA exemption because your business will not directly handle sensitive cardholder data.

Let’s look at a few differentiators between Wero and extant mobile payment solutions.

Fewer intermediaries, faster transfers and lower fees

As Wero is a pass-through digital wallet solution, it’s comparable to apps like Google Pay and Apple Pay. Theoretically, Wero’s transfer speeds could be roughly equal to those of incumbents. However, Wero’s fund transmission times may be even faster given the lack of card scheme intermediaries. 

The differentiator here is that Google and Apple’s systems use a tokenized card to process funds, whereas Wero is account-to-account. So Wero users cannot access the benefits of credit cards (such as loyalty points or, indeed, credit), and should only use the A2A solution for highly trustworthy payees.

For merchants, a huge cost benefit is avoiding the interchange fees that make up the greatest proportion of card processing costs. Of course, the choice of card payments versus a direct account transfer is not entirely an equal one. In practice, buyers may feel more comfortable paying with cards, and could need some convincing to switch to Wero.

Pan-European utility for better cross-border flexibility

Wero should be more convenient for end users than existing mobile payment apps because of its interoperability with many major European banks. Although competitor solutions such as giropay and Przelewy24 are extremely popular in their respective nations, they don’t offer as much flexibility as Wero when it comes to cross-border payments. The pan-European functionality of Wero is its single greatest selling point.

Multi-bank interoperability equals convenience for users

Another issue with Europe’s siloed mobile payment options is the difficulty of interoperation between different account types. For example, one problem that Monzo users currently face is the extra friction involved in sending money to someone who doesn't already have a Monzo account. To send a bank transfer, a Monzo user needs their payee’s full name, bank account number and sort code. 

Wero can eliminate that tricky fact-finding mission. Given that Wero will be rolled out across such a vast proportion of European bank accounts, there’s a good chance that two Europeans would both already have access to Wero’s transfer protocol. Therefore, a peer-to-peer transaction would potentially only require the payee’s phone number. This means payments could be sent with one or two clicks rather than filling out multiple form fields.

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What problems is Wero designed to solve?

Currently, there are a plethora of different account-to-account (A2A) payment solutions in each European locale. While these are trusted and convenient for users in their home nation, they are not always widely accepted across the European Economic Area.

For instance, local payment method Sofort is supported in the following countries: Austria, Belgium, Germany, Netherlands, and Spain. A Sofort customer in Germany may therefore struggle to pay a Norwegian merchant with their Sofort account. 

Wero could also reduce the need for merchants to integrate with several different instant payment solutions to cater for European customers. Rather than an online gift shop, for example, having to onboard iDeal, Przelewy24, giropay, Bancontact – and even more – the merchant could simply connect to Wero. 

To summarize, the main benefits of Wero are positioned as:

• Unified across many European financial institutions
• Minimal onboarding effort
• Convenient digital wallet
• Multiple channels (P2P, online, and in-store) 
• Safe and regulated by EU financial codes
• Cheaper than some alternatives

Backed by the European Central Bank, Wero is positioned as a Europe-centric competitor to US payment companies such as Apple Pay and Google Pay. 

What are the potential drawbacks to Wero?

Digital payment solutions such as Apple Pay, Google Pay, Klarna and PayPal offer certain unique benefits over Wero’s proposed model. It may take some convincing to win over current customers from these platforms, given the diversity of funding transfer options these players already offer.

A2A only

Wero users will not be able to hold a digital balance like they can with PayPal. Nor will it be possible to utilize Buy Now, Pay Later, also known as BNPL, a preferred funding option for many merchants. Arguably, Wero is therefore less convenient and flexible as other modern payment options such as PayPal and Klarna.

Closed ecosystem

Wero users will need a bank account with one of the Wero network institutions in order to use it. This is somewhat less convenient compared with other digital wallets that allow connection with a wide variety of funding sources. 

A long wait for Wero’s launch

Wero has been a slow and steady project. Go-live is scheduled four long years after the European Payments Initiative (EPI) first formed in 2020 with the aim of creating a unified European A2A solution. Yet the team has expanded greatly in size since 2020, which makes sense given the goal of widespread adoption.

Furthermore, each of Wero’s partner financial institutions has their own technical standards and regulatory requirements. Small wonder, then, that Wero’s rollout is no speedy affair.