Summary

EU’s  payment and identity landscape is currently the theater of a high-stakes conflict between regulatory ambition and commercial reality. For the past decade, European legislators have pursued a strategy of “regulatory innovation,” attempting to break the dominance of US-based technology platforms (Apple, Google) and payment networks (Visa, Mastercard) through legislative mandates. From the failed efforts of 2015 IFR (regulating excess profits), PSD2, PSD3 and eIDAS 2.0, the pattern is consistent: enforce technical openness in the hope that competitive markets will spontaneously emerge.

This strategy is fundamentally flawed because it conflates technical connectivity with commercial viability. While the EU has successfully legislated open APIs and is now forcing open the phone SE architecture, it has consistently failed to address the “commercial constructs” (governance, liability, and economic incentives) that make these systems work. Without a radical shift acknowledging the necessity of commercial constructs over regulation, the EU’s initiatives will result in compliant but commercially irrelevant infrastructure, that no one will monetize (or invest in), further relegating the EU to a second tier market and leaving US platforms to dominate.