ECB says digital euro will give Europe control over its payment systems

The European Central Bank has renewed its push for a digital euro as a way to reduce Europe's dependence on foreign payment providers, with a pilot scheduled for 2027 and a possible rollout in 2029.

Summary

• ECB official Piero Cipollone said the digital euro could give Europe more control over its payment infrastructure and reduce dependence on foreign providers.
• The ECB plans to begin a digital euro pilot in 2027, with 36 payment providers involved in preparations and a possible public rollout in 2029.
• Cipollone said two thirds of online card payments in Italy rely on non European card schemes, while smaller merchants can face much higher processing fees.
• The proposed digital euro would support offline payments and include wallet holding limits, while allowing users to spend more through linked bank accounts.
• The ECB can only make a final decision on issuing the digital euro after European lawmakers approve the necessary legislation.

In an October 24 interview with Italian financial newspaper Milano Finanza, ECB Executive Board member Piero Cipollone said Europe needs its own payment infrastructure to ensure that essential financial services can continue operating without relying entirely on companies based outside the region.

Cipollone compared Europe's dependence on foreign payment networks to its reliance on external suppliers for energy and defense, arguing that payments should be treated with the same importance.

"In recent years Europe has learned that, for some essential services, we cannot rely only on third parties," he said.

However, he clarified that European payment sovereignty does not mean excluding international providers. The ECB wants to give consumers and businesses another option that operates on infrastructure controlled within Europe.

Digital euro could reduce Europe's dependence on foreign payment networks

Cipollone pointed to the growing use of digital payments as one of the main reasons Europe needs an alternative to existing payment systems.

In Italy, online payments accounted for 24% of total payments in 2024, compared with just 6% in 2019. According to the ECB official, two-thirds of these online card payments rely on non-European card schemes.

The dependence is not limited to online shopping. Many euro-area countries lack domestic payment networks comparable to Italy's Bancomat, leaving merchants reliant on international providers even for purchases made in physical stores.

Cipollone said smaller businesses face another problem because their payment processing fees can be up to four times higher than those paid by large merchants.

The digital euro would introduce a European payment option with legally established fee caps, which the ECB expects to improve competition and lower costs for merchants with limited bargaining power.

The central bank has already signed agreements with European standards bodies to use existing payment specifications, reducing the amount of new infrastructure banks and merchants would need to develop.

ECB prepares digital euro pilot with 36 payment providers

Preparations for the digital euro have continued ahead of a 12-month pilot scheduled to begin in the second half of 2027.

The ECB has selected 36 payment service providers, including seven from Italy, to participate in the exercise. The program will involve employees from the ECB and 19 national central banks making transactions using a beta version of the digital euro.

Participants will test payments between individuals, purchases at physical stores and transactions through online and mobile shopping platforms.

As crypto.news previously reported, the ECB has invited online merchants to participate in the pilot, with applications open until October 27.

The pilot will allow the central bank to examine how the technology performs in everyday situations before making a final decision on issuance. The beta digital euro will not have legal tender status.

Cipollone said the ECB hopes European lawmakers will approve the necessary regulation by the end of 2026. The Governing Council can only decide whether to issue the currency after the legislative process has concluded.

If the regulation is adopted this year, the ECB expects to be technically ready for a possible launch in 2029. Banks, payment providers and merchants would still need time to prepare their systems.

Digital euro payments would work offline with wallet holding limits

The proposed digital euro would allow people to make payments without an internet connection, including during power outages or in areas with unreliable connectivity.

According to Cipollone, users could complete offline transactions by bringing two devices close together, similar to contactless card payments. Transaction details would remain between the payer and recipient.

The ECB has previously outlined its proposed privacy safeguards, although banks would still conduct identity verification and required compliance checks for online payments.

Users would be able to access digital euros through their existing banking applications or a separate app provided by the Eurosystem. Banks and other authorized intermediaries would continue managing customer relationships.

Cipollone confirmed that digital euro wallets would have holding limits to protect financial stability, particularly during periods of banking stress.

However, spending would not be capped. If a purchase exceeded the available digital euro balance, the remaining amount could be taken automatically from a linked bank account.

ECB continues exploring new payment services

The ECB is preparing a common payment infrastructure built by European providers, with private companies able to develop services using the system.

More than 70 operators have already participated in its innovation programs, examining features such as automatic digital receipts and payments triggered when online purchases are delivered.

The central bank has since opened another testing program covering artificial intelligence agents, micropayments and conditional transactions.

Cipollone said the digital euro would remain a payment instrument alongside cash and existing banking services. Its planned security measures include encryption, separation of sensitive data and regular simulated cyberattack testing.

The infrastructure would be distributed across several European regions so that payment services could continue operating if one part of the system became temporarily unavailable.