By Radi El Haj, CEO at RS2
The digital euro is moving into an important phase. As one of the payment service providers selected to participate, RS2 will have the opportunity to help test how that concept translates into real payment environments, with testing planned from H2 2027. We can now start asking what the digital euro looks like when it meets real merchants, consumers and transactions.
Europe is not starting from scratch. In H2 2025, consumers and businesses made 47.8 billion card payments across the euro area, including 32.9 billion contactless transactions. There were 872.7 million payment cards in circulation, while instant payments are also gaining ground rapidly.
The consumer experience is already highly competitive. People can tap a card, use a mobile wallet or make an instant payment without thinking about the infrastructure underneath. A new payment method therefore cannot rely on novelty to create demand.
The digital euro needs a different proposition
The strongest case for the digital euro is not that Europe needs another convenient way to pay. Cards and instant payments already do that well. Its more interesting proposition is what it could mean for European payment infrastructure. A pan-European, publicly backed digital form of money could give consumers a payment instrument designed to work consistently across the euro area. It could also introduce offline functionality and privacy characteristics that distinguish it from existing digital payment methods.
That is primarily a question of resilience and strategic autonomy. Europe’s payments ecosystem is increasingly critical infrastructure and reducing dependence on individual commercial networks has an obvious strategic attraction.
But strategic value does not automatically create consumer demand.
Merchants have little appetite for complexity
For merchants, the question is practical: how difficult will it be to accept?
The euro area already has around 25.7 million point-of-sale terminals, with 93% accepting contactless payments. Merchants have invested heavily in payment acceptance, fraud prevention, reconciliation and reporting. They are unlikely to welcome another system requiring substantial changes to existing infrastructure. The digital euro therefore needs to fit into the payments ecosystem that already exists. Acquirers and processors will have an important role in connecting a new payment rail to existing merchant technology.
The difficult part of payments is rarely getting a transaction from A to B. It is making everything around that transaction work reliably: settlement, reconciliation, liquidity, fraud controls and integration.
The challenge, therefore, is not simply adding another payment rail, but orchestrating it alongside the rails merchants already use without adding operational complexity.
Offline payments could be the biggest technical test
Offline functionality is one of the digital euro’s most interesting potential advantages, but also one of its hardest technical challenges.
A payment that works without connectivity could improve resilience and provide some of the characteristics people value about cash. But secure device-to-device payments introduce complex requirements around authentication, secure on-device value, transaction limits and the prevention of double spending, all while preserving the simplicity consumers associate with cash.
These problems need to be tested in environments that resemble everyday commerce. That is one of the most useful aspects of the pilot: identifying where the technology meets operational reality.
Privacy will shape trust
Privacy could be one of the digital euro’s most distinctive features. The ECB has indicated that offline digital euro payments should offer a level of privacy comparable to cash, giving consumers greater control over how their payment information is handled while retaining the safeguards needed to meet anti-money laundering and financial crime requirements.
Getting that balance right will be important, but it also presents an opportunity to set a new benchmark for privacy in digital payments. Consumers should be able to understand what information is shared, who can access it and under what circumstances, without needing to understand the technical architecture behind the payment.
If the digital euro can combine the convenience of digital payments with meaningful privacy protections, it could offer something genuinely different to consumers and strengthen trust in Europe’s next generation of payment infrastructure.
The pilot is where the important questions get answered
The significance of the pilot is that it moves the digital euro from design into practical testing. Bringing together payment service providers, banks, merchants and Eurosystem participants creates an opportunity to assess how the proposed system performs across the different parts of the payments ecosystem. Payments experience shows that seemingly small operational details can have a significant impact on the user experience. A transaction may be technically instant, but still create friction if integration is difficult, settlement is complex or acceptance varies between merchants and markets.
The pilot can help identify those issues early and provide evidence about what needs to change. It should test not just whether the technology works, but whether the wider model works for the people and businesses expected to use it.
The ECB aims to be ready for a potential first issuance of the digital euro during 2029, assuming the necessary EU legislation is adopted.That leaves time to refine the design based on what the pilot reveals, rather than treating today’s assumptions as fixed.
For the wider payments industry, that is arguably the most valuable outcome. The digital euro does not need to replace cards, instant payments or other established rails to be transformative. Its success will depend on how effectively it can operate alongside them, and whether banks, acquirers and payment providers can integrate it without adding complexity for merchants or consumers.
The future of European payments is unlikely to be defined by a single payment method or rail. It will be defined by infrastructure capable of connecting and orchestrating multiple forms of money and payment in real time, while preserving resilience, trust and choice. The digital euro has the potential to become an important part of that ecosystem and the pilot is where we begin to discover what that potential looks like in practice.
