> If you're building out a brand new system, why not make use of the computing device with input/output capabilities

There is no sovereign EU mobile OS. Adding a hard dependency to Android/iOS is removing one US hard dependency in your payment stack to add another. So, physical cards are a must until there is a European mobile OS with widespread adoption (i.e. never).

Unfortunately, the EU approach here has been not only adding this iOS/Android hard dependency, but also locking it down with crap like device attestation to make sure that it is impossible to use their "sovereign" systems without a US corporation (Google/Apple) certified device. They are actively hostile to alternatives like Lineage or Graphene for instance.