Last month, Jamison Greer, a top US trade official, complained that Pix, the Brazilian instant payment system, puts American companies like Visa and Mastercard at a disadvantage. The United States proposed in response the imposition of an additional 25% tariff on Brazil. However, the Brazilians seem to be unaffected. "Pix is a Brazilian achievement, and we are not going to abandon it," replied Luiz Inacio Lula da Silva, the President of Brazil and a frequent critic of American power. Even his right-wing opponent, Flavio Bolsonaro, stated that he is not prepared to give up the payment system. Instead, he proposed a compromise under which Brazil would commit to not connecting Pix with cross-border payment infrastructures that compete with American ones.
This episode captures the new geopolitical reality of the global economy. As America implements what US Treasury Secretary Scott Bessent recently described as "economic statecraft in the 21st century"—under which global access to the dollar and the US economy "is no longer unconditional"—while other nations try to respond with similar measures, the global financial system is fragmenting into regional and national networks. This is happening first in the payments sector—representing a major headache for Visa and Mastercard, the American duopoly that dominates the industry.
In January, Auror Lalook, chair of the European Parliament's economic and monetary affairs committee, warned that a hostile US could easily cut off the continent's access to payment infrastructure. "You won't be able to say you weren't warned," she stated, arguing that Europe must create its own alternative solutions. A few weeks later, a group of British banking executives reportedly met in London to discuss creating a UK competitor to Visa and Mastercard. "It is crucial for all of us to have control over digital payments," stated Christine Lagarde, President of the European Central Bank (ECB), in a radio interview earlier this year.
Fear of payment networks was until recently limited to countries with "tense geopolitical relations" with America, notes John Collison of Stripe, a payments company. Following the imposition of US and European sanctions that cut Russia off from international payment infrastructure, the country turned to its own messaging system (SFPS) and its own card network (Mir). China has also established its own cross-border infrastructure through state initiatives and the expansion of private giants, notably Alipay and WeChat Pay, fearing American dominance.
Now, these cases are no longer exceptions. Today, diversifying away from America is a "burning desire of policymakers in almost every country," says Eshwar Prasad of Cornell University. While much of the debate has focused on the role of the US dollar, governments increasingly view payment infrastructure as a more realistic path to financial independence. Su Gao, an economist at Bank of China International, argued in May that instead of focusing on converting cross-border flows into yuan, China should prioritize "ensuring it has secure international payment channels" and the "global expansion of the renminbi payment network."
Those seeking to diversify the infrastructure over which their cross-border transactions travel have several options. One of these options is the development of domestic systems. Prominent examples include several recent European projects, which are accelerating after years of delays. The Single Euro Payments Area (SEPA), a set of infrastructures for euro payments, now numbers 41 member states. A coalition of European banks and fintech firms is backing Wero, a digital wallet system aiming to unify national instant payment systems like iDeal, a Dutch platform. "It is simple, seamless, and Made in Europe," the platform's website boasts. The ECB also hopes to launch a digital euro issued by the central bank by 2029.
Another option is moving away from US systems and turning toward those linked to the other superpower. Bank of China has recently added dozens of countries to the digital yuan system for cross-border transactions, notes Josh Lipsky of the Atlantic Council think tank. In March, China's Cross-Border Interbank Payment System (CIPS)—an alternative to the Belgium-based but US-dominated SWIFT interbank transaction network—funneled record average daily flows of 920 billion yuan ($134 billion), representing a 20% increase compared to the same month of the previous year. In April, it achieved a new historic high in daily transaction volume, reaching 1.2 trillion yuan, according to data provider FXC Intelligence.
A third option is bypassing international projects in favor of bilateral agreements. The United Payments Interface (UPI), India's QR-code-based payment system, currently operates in nine other nations, with several more in the process of joining. Ritesh Shukla of NPCI International, which manages UPI's international efforts, reports that his team has a "rich roadmap" for further expansion, both by interconnecting existing networks and helping countries develop their own platforms. "Our brand promise is that we will make you sovereign, so you can fulfill your own domestic commitments and advance your own national agenda," he notes.
The vast majority of cross-border payments still route through American payment infrastructures (or infrastructures to which the United States has access). However, bilateral and multilateral agreements linking national payment networks, such as Pix and UPI, may allow countries to shield major transaction flows from existing card and correspondent banking systems, according to Prasad. In the short term, insufficient liquidity in certain currencies may limit transaction volume in these corridors. Ultimately, innovations in digital money may allow far more retail payments to completely bypass traditional channels. However, in the medium term, established players in the payments space are likely to feel the pressure.
Time for retaliation
The rise of "sovereign" payment systems, particularly in Europe—a region that represents a key source of international operations for Visa and Mastercard—could erode their enviable operating profit margins, which exceed 50%. In their latest annual reports, both companies cited the "preferential" treatment of domestic payment systems as a risk to their business. This may be one of the reasons why investors have recently appeared cautious toward the two giants, despite their strong financial results. Following a steady rise starting in 2023, their share prices have declined over the past year.
Oliver Jenkin, Visa's president for global markets, states that he travels the world to reassure governments that the company takes local concerns seriously. In May, Visa announced an investment of €500 million ($571 million) in European infrastructure, including a technology hub in Poland, which is expected to open in 2027. In April, the company's management also announced a partnership with UnionPay, a Chinese payment firm, aimed at providing real-time payment services in China.
Mastercard, for its part, is also rushing to protect its operations from geopolitical shifts. "A European payment network already exists and works to the benefit of Europe. That network is Mastercard," wrote Kelly Devine, president of Mastercard's European operations, in 2025. To support these claims, the company is building three data centers in France with a total investment of €250 million, adding them to the dozen or so facilities it already operates in Europe.
The shift toward economic and technological "sovereignty" may create problems not just for the payment card giants. The Financial Stability Board (FSB), an international body monitoring progress in cross-border payments, estimates that system fragmentation will likely prevent the G20 group of major economies from hitting the global targets it set in 2020 for payments—especially regarding faster and cheaper money transfers.
However, the most serious risk, according to Lipsky, is that the pursuit of sovereignty in payments could eventually lead to the development of disparate regional systems that are incompatible with one another. This would increase the risk of financial fraud and sanctions evasion while simultaneously harming the global economy. A report sponsored by SWIFT (and compiled by Economist Impact, our sister company) estimates that if current trends continue, financial fragmentation could reduce global GDP by 2.6% by 2030. Countries may find that the price of payment sovereignty is higher than they calculate. The same may apply to America as well.
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