The continent's heavy reliance on American technology for both data storage and financial payments has created a critical vulnerability. Now, a strategic push for digital sovereignty is underway, aiming to build a new foundation for the European cloud and its financial infrastructure.
What is the current state of the European cloud?
The European cloud market is fundamentally dependent on foreign providers. A small number of American technology companies dominate the landscape, creating a significant structural reliance. This concentration of power presents risks to the security and confidentiality of European data.
American cloud providers operate under United States extraterritorial laws, such as the CLOUD Act and FISA. These laws can permit government access to data, which conflicts with Europe’s goal of data privacy. This has prompted European states to demand stronger sovereignty requirements in cloud service certifications.
In response to these dependencies, the continent is pursuing a strategy of "digital sovereignty". This involves establishing standards and frameworks to ensure data is protected under EU law. The goal is to create a trusted digital infrastructure, free from foreign legal oversight.
How Is Europe Building Its Digital Sovereignty?
Europe is creating new rules to govern its digital infrastructure. The European Cybersecurity Certification Scheme for Cloud Services (EUCS) is a key initiative designed to create a unified security framework. This program aims to provide a clear standard for cloud security across all member states.
The European Commission also launched a Cloud Sovereignty Framework to define what independence means for cloud services. It uses a scoring system to evaluate providers based on criteria like legal compliance, operational transparency, and data governance. This framework is meant to guide public and private sectors in selecting secure cloud options that align with EU values.
These efforts are not without challenges. The push for sovereignty is an expensive and complex undertaking, with some estimates putting the cost in the trillions of euros. Furthermore, there are active debates on whether these new frameworks will create a level playing field or inadvertently favour the established American giants they are meant to counterbalance.
Where do payments fit into this picture?
The push for sovereignty extends beyond data into the critical area of financial transactions. Currently, the European payments market is a duopoly controlled by Visa and Mastercard. These two American companies process the overwhelming majority of card payments across the continent.
Their market penetration is deep, with the two networks processing over 95% of all card payments in the United Kingdom, for example. In 2023, their combined payment volume in Europe reached approximately 4.7 trillion US dollars. This dominance persists even during periods of slower economic growth in Europe, with both companies reporting double-digit growth in payment volume, indicating they are still expanding their market share.
This dependence on foreign payment networks is viewed as a strategic vulnerability. It centralises control over critical financial infrastructure outside of European authority. This has accelerated the development of a homegrown alternative payment system.
What is Wero, and how does it challenge the status quo?
Wero is the European answer to the dominance of non-EU payment solutions. Launched by the European Payments Initiative (EPI), a consortium of major European banks, Wero is a pan-European digital wallet and payment system. It is designed to offer a unified, secure, and instant payment method across the continent.
The system is built on the SEPA Instant Credit Transfer scheme, enabling real-time payments directly between bank accounts. This structure bypasses the traditional card network intermediaries, which can lower transaction costs for merchants and consumers. Wero's ambition is to become a unifying standard that strengthens Europe’s economic integration and global competitiveness.
The introduction of Wero is supported by new European regulations like PSD3 and the Payment Services Regulation (PSR). These regulations are designed to foster innovation and competition in the payments sector. They create the necessary conditions for a scalable, pan-European solution like Wero to succeed.
What is the technical outlook for these initiatives?
The path to digital autonomy involves significant technical shifts. In the cloud sector, American providers are already adapting by establishing separate EU-based business units and data centres. These moves are designed to reassure customers by localising data storage and management, although questions about ultimate legal jurisdiction remain.
For payments, Wero is following a phased roadmap. The service began with person-to-person (P2P) money transfers in 2024. The rollout will expand to e-commerce solutions in 2025, followed by in-store payment pilots in 2026. The long-term vision includes QR code-based point-of-sale payments and other services like digital identity and loyalty programs.
Technically, Wero aims to replace the fragmented landscape of domestic payment networks with a single, interoperable system. This allows businesses to integrate one payment solution to access customers across multiple EU countries. It simplifies cross-border commerce for both merchants and consumers.
How does this reflect a broader trend of deglobalisation?
Europe’s pursuit of digital and payment sovereignty is a clear manifestation of deglobalisation. This trend sees regions seeking to reduce their reliance on global systems for critical infrastructure. It is a strategic pivot toward regional autonomy, driven by geopolitical shifts and a desire for economic security.
This is not just about technology or finance. It is a political choice to ensure that essential services are governed by European laws and values. By building its own cloud and payment infrastructures, Europe aims to secure its strategic autonomy in an increasingly fragmented world.
The creation of these parallel systems signals a fundamental change in how Europe interacts with the global digital economy. It represents a long-term investment in building a more resilient and independent continental market. This process will shape the future of global technology and finance for years to come and for any questions, help and practical planning on how to address it, Ximedes is always here to help.
