ECB digital euro to challenge card giants with zero fees
European Parliament backing paves the way for a 2027 pilot of a fee-free public digital currency designed to slash merchant costs and reclaim payment infrastructure from foreign card schemes.
The European Parliament has voted nearly 70% in favour of the digital euro, granting strong democratic legitimacy to the European Central Bank’s plan to issue a digital form of cash. The vote confirms the project's robustness after extensive consultations with citizens, merchants and banks across the continent.
For banks and payment companies, the digital euro represents a direct disruption to the current card payment model. Today, merchants pay a percentage of each transaction to cover fees charged by card schemes like Visa and Mastercard, as well as processing banks. Under the digital euro model, the ECB will set the rules but will collect no scheme or processing fees.
Those eliminated fees will generate savings to be shared between merchants and banks, though lawmakers are still deciding the exact split. Merchants will be legally required to accept the digital euro for digital payments, just as they must accept physical cash, but they will be protected by a cap on the costs they bear.
The shift is not purely a technical exercise. Piero Cipollone, an ECB Executive Board member, noted that most of the infrastructure Europeans currently use for everyday payments is not in European hands. With a third of all European transactions now taking place online where cash cannot be used, the central bank argues a public digital alternative is necessary to ensure the continuity of payment systems.
A small-scale pilot will launch in September 2027, initially limited to merchants, banks and central bank employees. The ECB selected 36 payment service providers from a pool of over 50 applicants to test the system over a 12-month period, including French banking group BPCE and payment processor Worldline.
The Eurosystem estimates total development costs at around €1.3 billion, with annual operating expenses of roughly €320 million. These costs will be covered by seigniorage revenue, the same way physical cash issuance is funded. For commercial banks, preparation costs will consume no more than 3.4% of their annual IT update budgets over four years.
The digital euro differs from the upcoming Wero payment app because it is central bank money guaranteed to be accepted everywhere in the euro area, even offline. Cipollone said the digital euro will actually support commercial solutions like Wero by allowing them to process transactions in areas where their own networks are not yet accepted.
On privacy, Cipollone pushed back against surveillance concerns from critics. Offline transactions will offer cash-like anonymity, while online payments will be encrypted so the central bank cannot identify the payer, leaving only the user's commercial bank with that data.
