The Digital Euro road so far
The last few weeks have felt like years of advancements for the Digital Euro project. The proposal, under the Single Currency Package of June 2023, has sat in the desk of the rapporteur MEP Fernando Navarrete (EPP, Spain) for almost a year, since 16 December 2024. This, however, changed on the last week of October: MEP Navarrete released his 166-page-long draft report. Interestingly, this is the second draft report of the Digital Euro, following the first one written by MEP Stefan Berger (EPP, Germany). Nonetheless, after the 2024 Elections, a reshuffle in the team of rapporteurs led MEP Navarrete to be at the helm of the file.
On top of the draft report, the last week of October also saw the European Central Bank’s closing the preparation phase of the Digital Euro, that had started on November 2023, for which a progress report of the preparation phase was released. In this phase, the institution refined the Digital Euro’s practical design, by advancing in the development of the Digital Euro scheme rulebook, selecting the providers for Digital Euro components and services, the running of an innovation platform, or the investigation of how the Digital Euro fits in the payment ecosystem. The ECB also recently gave input on the investment costs for the euro area banking sector and technical data on the financial stability impact of the Digital Euro to the co-legislators. On the day of the conclusion of the preparation phase, the ECB additionally released a report on the needs of citizens and merchants.
Relevance for merchants: a Digital Euro fit for purpose
The Digital Euro has the potential to transform European payments and give the EU a competitive spot in payments technology. The Digital Euro will be a Central Bank Digital Currency (CBDC), and it is as such expected to receive the legal tender status, making it an official and recognised form of payments in the euro zone. This is especially relevant for merchants, as the business end-users of payments. The Digital Euro is an opportunity to reduce dependency on non-European card schemes, allowing for more competition and a diversification of the payment mix expected to benefit merchants and consumers alike. The Digital Euro, as a public good, could bring opportunities for everyone: greater privacy, improved digital financial inclusion, the possibility of having an offline digital means of payment.
Nonetheless, the question of the cost remains a major concern for merchants. It is crucial that this new solution avoids replicating the high costs associated with card-based payments options currently available on the market. Alongside the Merchant Payments Coalition Europe, Ecommerce Europe has been advocating for a simple and uniform cap of 4 cents per transaction for the total merchant service charge (MSC) instead of the caps suggested in the proposal. The Digital Euro presents an opportunity to offer low transaction costs, enabling merchants to incentivise consumers to use it.
One of the main draws to the Digital Euro is its announced offline option, allowing consumers to make electronic payments without an internet connection. However, the proposal suggests an offline Digital Euro wallet that would come separately from the online one. Merchants believe that an offline functionality of the online Digital Euro should come first to save time and cost and support consumer adoption. If separate wallets do indeed come, swapping between them should be seamless.
In addition, the current proposal sets out that once businesses are paid, Digital Euros will immediately convert into commercial money. Nonetheless, B2B payments, where merchants could pay, for instance, their providers, could be beneficial. If the Digital Euro is converted into commercial money right away, a heavy load could come with that conversion, as it would add costs for merchants when paying other businesses.
For the Digital Euro to run smoothly, there needs to be a standardised open European payments infrastructure, enabling both private and public propositions to use it and compete on functionality and value/cost trade-off. Its success will depend on addressing the concerns of all stakeholders, including those of merchants, and ensuring the Digital Euro becomes a user-friendly, cheap and practical alternative. By embracing these principles, the project could fulfil its potential as a transparent, consumer-focused, and merchant-ready payment solution.
The road ahead
The presentation of the draft report by MEP Navarrete, in the Committee on Economic and Monetary Affairs (ECON) took place on Wednesday 5 November. MEPs will have until 12 December to present their amendments to the draft report. Then, the amendments will be discussed in the ECON Committee on 28 and 29 January 2026. Once the draft mandate is agreed upon by the Committee, it will reach plenary for its adoption, most likely on 5 May 2026. On the side of the Council, the Danish presidency has stated that it will seek to adopt the Council’s position by the end of the year.2025, before their six-month presidency is over. Trilogues would start the earliest in late Q2 or early Q3 2026, under the Cypriot or Irish presidency. If the file is adopted in 2026, pilot exercises could take place mid-2027 and the Digital Euro could potentially be issued in 2029, according to the ECB.