The Hidden Frictions in Europe's Single Payment Market

Alejandro Martínez · 2026-10-01

The idea of a single European market for financial services has been around since 1993. On paper, it's a beautiful thing. It's built on the European passport principle: a company authorized in one member state should be able to operate seamlessly across all the others. But here's the thing—theory and practice are two very different animals. In reality, financial players who try to expand across borders still hit a lot of friction. It's like having a passport that says you can travel anywhere, but then finding out every border has its own secret handshake. That's exactly why the 'Bridging Borders' initiative was born. Back in November 2025, the European Digital Finance Association (EDFA) and France FinTech launched the first edition. Their goal was simple but ambitious: create a direct dialogue between national supervisors and fintechs about the real-world obstacles to cross-border expansion. The first round was so productive that national supervisors themselves asked for more. So on September 23, 2026, France FinTech, under the EDFA's umbrella, hosted Bridging Borders #2. They brought together about forty key players, including twenty representatives from various supervisory bodies. The conversations were grounded in concrete case studies—real experiences from fintechs operating in multiple member states. This approach helped everyone better understand the gap between the European framework and how it's actually implemented on the ground. More importantly, it started to identify real paths for improvement. ### The European Passport: Promise vs. Reality In principle, the European passport should be a golden ticket. Get authorized at home, and you're good to go everywhere else in the EU. In practice? Many fintechs keep running into local administrative hurdles that aren't clearly based on EU law. These roadblocks complicate, slow down, or even completely stop their cross-border growth. Let's look at some specific examples shared at the event: - **Finqware** mapped complaint channels for Account Information Service Providers across all 30 jurisdictions in the European Economic Area. They found only 10 offered a channel truly usable by a cross-border operator. Just 4 published any response time. - **Memo Bank** documented similar struggles accessing national beneficial ownership registers. In countries like Luxembourg, Belgium, Ireland, the Netherlands, and Spain, access is still tied to having a local presence or a national digital ID—even when a company is legally operating under the freedom to provide services. - **Mifundo** quantified the fragmentation of credit data. They found 45 million European consumers have a financial history in more than one member state. Yet, accessing the data needed to assess their creditworthiness faces wildly different national conditions. Out of 41 European registries they approached, Mifundo got access to 19, is still discussing with 15, and was flat-out refused by 7. - **Lemonway** highlighted two key pain points for Payment Service Providers: divergent definitions of what a 'PSP agent' is across countries, and Anti-Money Laundering/Combating the Financing of Terrorism obligations that vary in their procedures, renewal cycles, and reporting requirements. As one participant noted, *'The framework exists, but the implementation is a patchwork. We're building a single market on 27 different sets of instructions.'* ### API Quality: Beyond Just Being Available The discussions also dug deep into the performance of banking APIs under PSD2 and the upcoming PSD3. For fintechs, having an API available isn't enough. If the user journeys are unstable, hard to follow, or difficult to use, the whole system breaks down. The quality of these APIs directly determines whether open banking actually works and whether the services offered to end-users are smooth and reliable. It's not just about opening the door—it's about making sure the hallway inside isn't full of obstacles. So, what's the takeaway from Bridging Borders #2? Progress is being made through direct conversation. Supervisors are listening, and fintechs are bringing concrete evidence to the table. The path to a truly single market is still under construction, but forums like this are providing the essential blueprints and tools needed to build it right, one brick—or one API—at a time.