ECB calls on merchants to test digital euro payments from 2027

The European Central Bank has invited e-commerce and mobile-commerce merchants across the euro area to join a 12-month digital euro pilot starting in the second half of 2027 as it works toward possible issuance of the currency in 2029.

According to the ECB’s Sept. 15 announcement, participating merchants will test a beta version designed to resemble the proposed digital euro, covering the technology, operational processes and user experience needed to handle payments.

The test currency will not be legal tender and will only be used within the pilot. ECB and national central bank staff will act as consumers during the exercise, allowing merchants to test how the system would work under controlled conditions before any decision on issuing a digital euro.

Digital euro pilot will test online and mobile payments

The ECB is looking specifically for merchants that can accept e-commerce and mobile-commerce payments in euros and operate within the euro area. Selected businesses will take part alongside the ECB, 19 euro-area national central banks and payment service providers already chosen for the program.

Testing will cover several payment types expected to form part of a possible retail digital euro. Staff acting as users will make person-to-person transfers, pay at physical stores, purchase goods online and make payments through mobile-commerce channels.

The central bank has been building the technical and commercial network needed for the trial for months. In July, the ECB selected 36 payment firms for the pilot, including Deutsche Bank, Revolut, CaixaBank, BNP Paribas, ING and other banks and payment providers.

As crypto.news previously reported, the group will participate in the same 12-month testing program beginning in the second half of 2027. The exercise is intended to give the ECB practical information on how the payment system operates before officials decide whether to proceed with a live currency.

Preparations have extended to the infrastructure merchants and payment companies would need to connect to the system. In April, the central bank signed standards agreements with the European Cards Payment Cooperation, nexo standards and the Berlin Group to reuse existing open payment specifications.

The arrangements were designed to lower integration costs for merchants and banks by allowing digital euro payments to work with established European payment standards instead of requiring entirely separate technical systems.

Merchant participation poses a commercial test

Getting merchants to accept the currency could become a separate challenge from building the payment infrastructure, according to Isadora Arredondo, vice president of global policy at Hedera.

“Many people think the digital euro’s success will depend on how governments and the public sector explain its usefulness,” Arredondo told CoinDesk via LinkedIn. “But the more difficult part will be making the project work commercially.”

Merchant participation would need to reach sufficient scale so consumers can use the currency without regularly encountering businesses that do not accept it, she said.

Payment costs could form part of that calculation. Arredondo said one possible incentive would be for payment service providers to reduce the fees charged to merchants for accepting digital euro transactions.

The ECB has already been working on how merchants and payment providers could prepare their systems before a final issuance decision. Executive Board member Piero Cipollone said in March that the central bank expected to establish digital euro standards ahead of the pilot so companies could begin adapting payment terminals and applications.

Technical preparation does not mean the currency has received final approval. The pilot remains separate from a live digital euro, while issuance requires the necessary European Union legislation and a subsequent decision by the ECB Governing Council.

ECB targets possible digital euro issuance in 2029

The European Parliament’s Economic and Monetary Affairs Committee advanced the legislative process in June by approving its position on the digital euro package.

The proposal included provisions for offline payments, privacy protections and limits on the amount of digital euros an individual could hold. Legislative work remains unfinished, meaning the ECB cannot issue the currency solely on the basis of its technical preparations.

If the required legislation is adopted, the central bank is targeting readiness for possible issuance in 2029. A separate Governing Council decision would still be required before the digital euro could enter circulation.

The project is being developed as European policymakers examine the role of foreign payment providers and privately issued stablecoins in the region. ECB officials have repeatedly raised concerns over the dominance of dollar-denominated stablecoins and their potential effect on European monetary autonomy.

Executive Board member Isabel Schnabel said in June that the global stablecoin market was approaching $300 billion, with Tether’s USDT and Circle’s USDC accounting for roughly 90% of the sector. She argued that dollar-backed stablecoins could strengthen the international role of the U.S. dollar while euro-denominated alternatives remained comparatively small.

Privately issued euro tokens have continued to expand under the EU’s Markets in Crypto-Assets framework. Data published by Decta and covered in July showed that the market capitalization of eight MiCA-compliant euro stablecoins rose 128% over the year through June 28, increasing from $295.6 million to $673.9 million.

The same period saw their combined trading volume rise 43.1%, from $47 million to $67.3 million, while the number of compliant euro tokens with active market data increased from five to eight. Dollar-backed stablecoins remained dominant globally, leaving the eight euro tokens at less than 1% of the total stablecoin market.

ECB President Christine Lagarde has warned that private stablecoins could pose risks to financial stability and monetary policy transmission in the euro area. In May, she argued that Europe should not replicate the dollar stablecoin model and backed central bank-led tokenized settlement infrastructure instead.

The digital euro pilot will give the ECB its first large controlled test involving central banks, payment providers and merchants before the institution reaches its targeted 2029 readiness date.