Europe runs on payment rails it doesn’t own. The digital euro is the first serious attempt to change that – and the fight over it has already begun.
Sofia runs a hair salon in Madrid. On her door, a handwritten sign reads: ‘Cash preferred. Card minimum €10.’
That sign is not a quirk of preference, it is a rational calculation. Every card payment costs her between 1.5% and 2.5% in fees, split between her bank, her payment processor, and the card networks – Visa and Mastercard.
Over a year, on €80,000 in revenue, those fees come to roughly €1,200–€2,000: money she would not pay at all if her clients used cash. What stings is where this money goes: to networks whose headquarters and rulebooks almost all sit outside the continent. And the trend is upward.
According to Banque de France’s sources, which we interviewed for this piece “reliance on non-European solutions […] leads to a rise in merchant fees, which have doubled in a few years. [passing] from 0.27% in 2018 to 0.44% in 2022.”
It happens that Europe is overwhelmingly reliant on US providers to run its bank operations. But attempts to offer an alternative to that model are being made: the digital euro is one of those.
The digital euro tries to address several issues at once – competition, privacy, inclusion, fragmentation of the single market. So far, the design is not settled and the choices still to be made are political as much as technical.
What Digital Euro is trying to do
The idea surfaced in 2019, when Facebook announced Libra – a private global currency that would have let billions of users pay in a digital token controlled by a tech company, not a government.
Christine Lagarde, newly arrived at the ECB, took it seriously enough to start exploring a public alternative. Libra never launched, but the question it raised didn’t go away: what happens to public money if private actors start issuing their own?
Since then, Donald Trump signed the GENIUS Act in July 2025, giving dollar-denominated stablecoins a legal framework designed for global reach: US-regulated tokens that any European could use to pay and save in dollars – beyond the reach of European law.
For most of history, cash was the only way to pay without going through a private company. Stablecoins change that calculation in the same way credit card networks did: whoever issues the currency and runs the pipes collects the fees, sets the rules, and sees the data.
Cards were the first privatisation of everyday payment infrastructure. Stablecoins could be the second – this time in a foreign currency. And cards are only one part of the picture.
In June 2023, the European Commission tabled a legislative proposal to create a digital euro – a form of electronic cash issued directly by the European Central Bank and available to every citizen and business in the eurozone. Unlike a bank deposit or a payment app, it would be a direct claim on the ECB itself: public money in digital form, distributed through commercial banks and payment providers but guaranteed by the institution that issues the currency.
The European Commission’s proposal includes two key design features intended to limit disruption to commercial banks: the digital euro would pay no interest, and individual holdings would be capped, with the ECB having previously indicated an initial range of around €3,000 per person.
Many other key elements – including mandatory merchant acceptance, merchant fees, and the precise role and compensation of commercial banks in distributing the digital euro – remain under negotiation between the European Parliament and EU member states. Those choices may matter as much as the technology itself.
Five tasks sit behind this proposal: carrying cash’s properties into the digital age; completing the single market; reducing dependence on non-European infrastructure; protecting citizens’ data; and keeping the monetary anchor public and European.
From fees to freezes
Who owns the way Europe pays
US-owned vs European-owned share of each payment channel, by market weight of leading brands
Each bar shows the US vs European ownership split within that channel (totals 100%), based on leading brands — an approximation, not an exact ownership audit. Sources: Worldpay Global Payments Report 2025; ECB Report on card schemes and processors 2025.
That foreign dependence would matter less if digital payments were a marginal concern.
They are not – and they are growing. Every tap of a card or phone runs on infrastructure Europe mostly doesn’t own. For most people, most of the time, foreign-owned infrastructure means nothing more than a fee on every transaction. But the same pipes that move money can also be used to block it.
In August 2025, judges of the International Criminal Court found their personal bank accounts frozen after Washington imposed sanctions on the court. There was no warning and no appeal: the banks processing their payments had little choice but to comply with US rules. The pipes of commerce, it turned out, were also a lever of foreign policy.
The infrastructure Europeans use — and don't own.
Three numbers that show how dependent European payments have become on non-European operators.
Card transactions on non-European rails
Visa & Mastercard handle nearly two-thirds of all euro-area card payments.
Digital wallet market, US-owned
PayPal, Apple Pay and Google Wallet dominate European mobile payments.
E-commerce value via digital payments
Up from 39% in 2014 — mostly through non-European wallets and networks.
Sources: Banque de France (2024 figures); ECB Report on card schemes and processors 2025; Worldpay Global Payments Report 2025.
■ Non-European share ■ European share.
Two sides of the argument
The proposal has divided two powerful sets of institutions. On one side, the ECB and the Commission, who designed it. On the other, Europe’s major commercial banks, who stand to be most disrupted by it.
The banks' case against
Fourteen major European banks – among them Deutsche Bank, BNP Paribas, and ING – publicly aligned against the project as currently designed.
Their objections are two. First, the retail digital euro largely duplicates payment options that private European players already offer, without clear added value for consumers.
Second, and more fundamentally: every euro held as a digital euro is a euro that leaves a commercial bank’s balance sheet – and banks rely on those deposits to fund loans. The deposit argument was spelled out most plainly in an April 2026 tribune signed by the heads of the French Banking Federation (FBF) and the employers’ organisations Medef and CPME.
If 200 million Europeans each held an average of €1,000 in a digital wallet, some €200 billion would exit the banking system, adding a claimed €4 billion a year to borrowing costs across Europe. Their proposed remedy is a much lower holding limit, as little as €100 per person.
The banks also point to Wero — the European payment app they themselves built, already live in France, Germany, Belgium, and the Netherlands — as evidence that a European-owned alternative is already arriving. Why, they ask, build competing public infrastructure?
The central banks' case for
The ECB counters that it is not trying to compete with banks or make them redundant. Its design already answers the two loudest concerns: the digital euro will pay no interest, so there is no reason to shift savings into it, and individual holdings will be capped, likely around €3,000.
Frankfurt also disputes the banks’ headline number. When co-legislators formally asked the ECB to model the effect of holding limits up to €3,000, the central bank found that using the digital euro for everyday payments would not harm financial stability — even under a crisis scenario it calls highly unlikely. Because the proposal is intended to respond to the steady decline in cash use rather than replace bank deposits, the ECB argues that the overall effect on deposits would be far smaller than banks suggest.
A banking sector study puts the digital euro’s rollout cost at €18 billion – a figure the Banque de France flatly rejects, estimating €4.5–6 billion instead. It also dismissed fears of consumer backlash: banks would still distribute the digital euro and manage customer relationships, as with cash. Unlike stablecoins, it keeps banks central to payments.
The core of the ECB argument is: industry stands to gain; the basic service will be free, cutting costs for merchants and payment providers compared with today’s international card networks. Banks and fintechs can build paid services on the free rails, from physical digital euro cards to conditional payments.
There is no reason the introduction of the digital euro should translate into higher bank charges for citizens.
One detail in the current negotiations complicates the ECB’s promise of free payments: European countries have defended a five-to-ten-year transition during which merchant fees would remain indexed to debit card rates. For that period, the public infrastructure would still carry a private price tag.
The debate over Wero follows the same fault line. The banks point to it as proof that a European-owned alternative is already arriving — live in France, Germany, Belgium, and the Netherlands, with ambitions to connect 130 million users across 13 countries. The ECB’s response is that Wero remains a private service, owned by the banks that built it, and still largely confined within national borders. A French user cannot yet pay a Spanish friend on Bizum as easily as paying someone at home. What it lacks, the ECB argues, is exactly what the digital euro would provide: a public backbone that no single bank owns and that works by right for every European.
What comes next, and what you can do now?
The EU regulation, proposed by the Commission in June 2023, is still moving through Parliament and Council. If the co-legislators adopt it this year, the ECB is targeting a pilot for the second half of 2027, with a possible first issuance during 2029 – though that timeline depends as much on political will as on technical readiness.
What you can do
The debate is live. Four groups can still shape what gets decided.
The ECB is preparing a pilot for 2027 and has opened a call for expression of interest to European payment service providers. If your company is licensed in the euro area, this is a direct opportunity to help shape how the digital euro works in practice — and to position yourself early in the ecosystem.
The decisive question is not the €3,000 cap — it is whether mandatory, free acceptance actually becomes law and is enforced. The regulation is still moving through Parliament and Council. Make your position known to your national trade association or directly to your MEP now; the standards set today will shape your costs for years.
BEUC, the EU's umbrella consumer organisation, has led privacy advocacy at European level. The task now is to make sure Parliament and Council hear from citizens and consumer groups before they vote — not only banks and processors.
Using European payment options where they exist should be the baseline by default. Demand for European services is what makes investment in them rational. And when elections come, ask which candidates have a serious position on European digital and financial autonomy.
The regulation is still being negotiated. The pilot won’t run until 2027. A first issuance, if it happens, is 2029 at the earliest. Sofia’s sign might stay on the door a bit longer.