What to expect from Europe’s payments and banking landscape in 2026

Europe’s payments market is entering a phase where scale and reliability matter more than novelty. Electronic payments are already embedded across the region, but priorities are shifting toward how these systems perform under constant demand, tighter regulation, and growing risk exposure. For banks, the challenge is no longer whether to update core systems, but how to do so without disrupting services that customers expect to be available at all times.

Regulation is one of the strongest forces shaping this transition The European Union’s Instant Payments Regulation requires euro-area banks to support instant credit transfers on a 24/7 basis, with funds made available within seconds rather than hours. This effectively redefines what “normal” payment availability looks like across Europe and removes the distinction between standard and premium payment experiences.

At the same time, faster payments are exposing new vulnerabilities. Fraud is rising not just in volume, but in sophistication.

The 2025McKinsey Global Payments Report highlights why this pressure is intensifying. Real-time payment models compress settlement timelines to seconds, while regulatory frameworks assume uninterrupted, around the clock service availability. Legacy payment systems, built around batch processing and fixed operating windows, struggle under these conditions. As customer expectations move toward instant access and constant reliability, infrastructures designed for periodic processing are placed under sustained strain.

Together, these developments point to a clear shift in priorities for European banks. The trends that follow reflect how payments and banking across Europe are expected to evolve through 2026, as speed, trust, and adaptability define competitive advantage.

1. Modern card programmes, wallets and tokenisation reshape issuing priorities

Market Insight

Cards remain the primary instrument for retail payments across Europe.

According to European Central Bank payment statistics, card payments represented 57 percent of all non-cash transactions in the first half of 2025, with 44.0 billion card transactions recorded during the period. The total value of card payments reached €1.7 trillion, reflecting their continued use in everyday, low-value consumer spending. Contactless usage is firmly established, with 29.6 billion contactless card payments made in the first half of 2025, supported by widespread acceptance infrastructure across the euro area. The number of payment cards in circulation increased to 879.3 million, highlighting the scale at which card-based credentials remain embedded in daily payment activity.

These figures show that cards continue to function as the main access layer for consumer payments. What is changing is how card credentials are accessed and used. Digital wallets, tokenisation, and virtual cards are becoming common interfaces, shifting the point of interaction away from physical cards toward digitally provisioned credentials stored on devices and platforms.

In parallel, European policy discussions point to a broader transformation in the nature of money itself. Public statements from European Central Bank policymakers indicate that commercial bank money is expected to become fully digital over time, supported by tokenised forms that align more closely with emerging payment infrastructures. In this context, digital commercial bank money is expected to coexist with central bank money, reinforcing a payment environment where value, credentials, and access mechanisms are increasingly digital.

These developments point toa structural change in the issuing landscape. While cards continue to account for the majority of retail payment activity, issuers are operating in an environment where payment instruments and money itself are digital by design.

What this means for banks

As wallets and tokenised credentials sit between the bank and the end customer, issuers must ensure that risk management, authentication, dispute handling, and regulatory obligations remain enforceable across channels they do not directly control. This places pressure on issuing platforms to support digital issuance, token lifecycle management, and consistent policy enforcement, rather than relying on processes built around physical card production and distribution.

Regulators and supervisory authorities face parallel challenges. When card credentials and payment initiation are mediated by third-party wallets and platforms, responsibilities for consumer protection, fraud liability, and compliance oversight becomes harder to assess without clear issuer visibility and auditable controls.

Other financial institutions across the card value chain, including acquirers and payment service providers, must adapt to tighter interdependencies between issuers, wallets, schemes, and merchants. As authentication and transaction initiation occur outside traditional card-present environments, coordination and data consistency across participants becomes critical to maintaining trust and resolving disputes effectively.

Banks that are unable to manage cards as digital products risk losing visibility into how credentials are provisioned, stored, and used across devices and wallets. Over time, this weakens their ability to control fraud exposure, meet supervisory expectations, and respond effectively to incidents in payment journeys where physical cards are no longer the primary interface.

Where BPC Fits

SmartVista Card Management supports end-to-end card issuing and lifecycle operations in a way that aligns with the shift toward digital-first payment experiences. The customer-centric platform is available as licensed software or cloud service that lets financial institutions to launch and manage credit, debit, prepaid, and multipurpose cards and wallet programmes across physical and digital channels.

A practical example of this approach is the deployment by Artea Bank, which migrated to SmartVista’s cloud-native, microservices-based issuing platform to modernise its Mastercard issuing processes. In that implementation, SmartVista’s architecture helped the bank accelerate the launch of new debit and credit products, support tokenisation for mobile wallets such as Apple Pay and Google Pay,and integrate with existing core systems in a way that enhances both operational flexibility and compliance readiness.

2. Instant payments become the default, not the upgrade

Market Insight

Instant payments in Europe are no longer positioned as an optional capability layered onto existing settlement rails. They are being defined as a standard operating requirement.

Under the EU Instant Payments Regulation, payment service providers in the euro area must fully support SEPA Instant Credit Transfers. Banks are required to receive credit transfers and be able to send outgoing euro transfers instantly. The regulation also introduces mandatory pricing parity between instant and non-instant credit transfers, removing the distinction that previously allowed instant payments to be offered as a premium service.

This requirement sits alongside high and sustained payment volumes across the euro area. European Central Bank data shows that 77.7 billion non-cash payments were executed in the first half of 2025, a 7.7 percent increase compared with the same period in 2024, with a total value of €116.0 trillion. Credit transfers represented 22 percent of all non-cash transactions, while retail payment systems processed approximately 55.7 billion transactions, worth €26.2 trillion, during the same period. These figures illustrate the scale at which account-to-account settlement infrastructures must operate.

At the same time, instant credit transfers continue to represent a limited share of total credit transfer volumes, reflecting historical constraints related to system readiness and commercial pricing rather than customer usage patterns. With mandatory availability and pricing parity now in force, these constraints are removed.

The impact is operational. Payment processing, liquidity management, fraud controls, and exception handling must function continuously, without dependence on batch processing, cut-off times, or overnight settlement cycles. For banks running legacy, time-bound architectures, instant payments highlight limitations that were previously accommodated under slower execution models.

What this means for banks

As instant payments become the norm, banks can no longer run them as side services layered onto batch-based systems. When money moves in seconds, issues such as errors, failed transactions, or potential fraud must be identified and addressed before a payment is completed, because there is limited scope for intervention once settlement has taken place.

This shift also changes expectations for regulators and the wider payments ecosystem. Regulators are placing greater emphasis on consistent availability, transparency, and preventive controls, rather than post-event correction. Payment schemes, infrastructure providers, and supervisory bodies progressively expect banks to demonstrate that instant payments are reliable under normal conditions and during peak periods, with clear safeguards in place. In practice, this raises the bar for how payment platforms are designed, tested, and monitored, as instant payments move from an optional service to a core part of Europe’s payments infrastructure.

Where BPC Fits

SmartVista supports real-time payment processing by providing a platform that connects payment channels with core processing and settlement systems in a single operational framework. This allows payment service providers and banks to process account-to-account transfers as they are initiated, with continuous availability, continuous monitoring, and integrated controls. The system fully compliant and is scheme agnostic, supporting all range of payment schemes in the market today.

3. Social engineering fraud becomes the dominant risk in faster payment environments

Market Insight

As payments across Europe become faster and more automated, the nature of fraud is changing with them. Instead of relying mainly on stolen card details or compromised accounts, many fraud cases now involve scams that trick customers into authorising payments themselves, often under pressure or false pretenses.

Data published jointly by the European Central Bank and the European Banking Authority illustrates this trend. The total value of fraudulent payment transactions in the EEA rose to€4.2 billion in 2024, up from €3.5 billion in 2023, representing a 17 percent year-on-year increase. At the same time, the overall fraud rate remained very low, at around 0.002 percent of total transaction value. This suggests that while payment systems themselves remain broadly secure, fraud losses are becoming more concentrated in specific scam-driven scenarios rather than reflecting widespread system weaknesses.

This pattern is echoed in the European Payments Council’s 2025 update, which highlights the growing role of social engineering, malware, and sophisticated attack techniques that target users and payment journeys directly, rather than exploiting weaknesses in bank infrastructure alone.

What this means for banks

With faster settlement, the window to stop fraud narrows. Banks can no longer depend mainly on checks that happen after a transaction has been completed or on recovery processes once funds have already moved. Instead, potential risk needs to be identified earlier in the transaction lifecycle, before money leaves the customer’s account.

Behavioural cues and contextual signals can be used to decide when to introduce additional steps, such as extra verification, customer warnings, or temporary pauses. Too much friction can disrupt everyday payments, while too little protection can undermine customer confidence and trust.

Where BPC Fits

SmartVista Fraud Management supports payment environments where real-time monitoring and behavioural analysis are needed to identify and act on risky patterns before funds leave the account. By analysing contextual and transactional signals as payments are initiated, the platform helps organisations embed risk controls closer to the start of the payment journey, rather than relying solely on post-event review.

For the European market, a comparable implementation can be seen at DSK Bank. As DSK expanded its payment and card services, the bank faced growing challenges in fraud detection across multiple channels, including card payments, account transfers, and e-commerce. Compliance with PSD2 and the need for 3DS2 risk-based authentication increased the requirement for an enterprise-grade approach.

SmartVista Fraud Management supports DSK with real-time monitoring across issuing and acquiring channels, using ML alongside rule-based behavioural profiling to detect and address emerging fraud patterns as transactions occur.

Another example from different region with this approach in action monitoring and investigation capabilities across a high-volume payment ecosystem, helping to detect and analyse suspicious activity quickly and consistently.

4. Open banking expands into open finance, with digital identity shaping trust

Market Insight

Europe’s approach to data sharing in financial services is gradually expanding beyond open banking toward a broader open finance model. In June 2023, the European Commission proposed a Framework for Financial Data Access (FiDA), which is intended to extend consent-based data sharing beyond payments to a wider range of financial products and services, marking the shift away from enabling APIs, toward ensuring that financial data is shared in a structured, secure, and consistently governed way across the financial system.

In parallel, digital identity is becoming more closely linked to how payments are authorised and trusted. In April 2024, the EU adopted Regulation (EU) 2024/1183, which updates the eIDAS framework and lays the groundwork for the European Digital Identity Wallet ecosystem. Together, these developments highlight how data access, identity, and payments are increasingly connected as part of Europe’s wider digital finance strategy.

What this means for banks

Banks usually rely on offering services through partners, platforms, and embedded journeys, rather than managing every customer interaction directly. How identity is verified, how consent is captured, and how authentication is applied all play a key role in whether customers trust and feel comfortable completing more sensitive digital actions, particularly when multiple parties are involved.

From a customer’s perspective, there is little distinction between a bank’s own channel and a third-party interface when something goes wrong. As a result, banks need to ensure that payment controls behave reliably across different environments, supported by clear governance and traceability.

Where BPC Fits

An example of identity intersecting with payments is the pilot led by BancaTransilvania delivered with BPC, which enabled Romania’s first payment authenticated through the EU Digital Identity Wallet (EUDIW). Built within the updated eIDAS framework, the project demonstrates how verified digital identity credentials can be used to authorise real payment transactions, linking identity, consent, and payment execution within a single flow. This reflects the direction of travel in Europe, where digital identity is expected to play a more active role in payment authorisation as open finance and cross-platform journeys become more common.

The road ahead for Europe

By 2026, Europe’s transaction challenge is likely to centre less on launching entirely new experiences and more on operating existing ones reliably at scale. Instant payments, evolving regulation, rising fraud risks, open finance frameworks, and the continued importance of cards and wallets are increasingly interconnected. Together, they point to an environment where payments must be available continuously, adapt quickly to change, and perform consistently across channels and partners.

For banks, this shifts the focus toward building foundations that can support ongoing change without repeated disruption. Platforms that are modular, standards-aligned, and designed to operate in real time are better suited to absorb regulatory updates, manage risk proactively, and meet customer expectations as Europe’s payments landscape continues to evolve.