Will the digital euro dethrone Visa and Mastercard? We know the details of the tests

The ECB has selected 36 payment service providers, including Revolut and Deutsche Bank, for a digital euro pilot in 19 countries, which is set to launch in 2027 and make Europe independent of American operators like Visa and Mastercard. The project aims to shorten the chain of intermediaries in retail payments, which will directly impact the revenues of card organizations. Frankfurt hopes that moving settlements to a public system will reduce costs for merchants, which currently represent a significant markup on the margins of European businesses.

Payment model analysis: The mechanics of competition

The business model of Visa and Mastercard is based on being an essential intermediary in almost every non-cash transaction. A merchant accepting a card pays a commission that is split between the card-issuing bank, the bank operating the terminal, and the card organization. On a European scale, this means billions of euros transferred annually to American corporations. The ECB views this state of affairs as a structural weakness in the bloc's monetary sovereignty. The digital euro is intended to function as a "public good," which means a paradigm shift in how payment infrastructure is financed.

Unlike private systems, where margin is an end in itself, the digital euro is designed to minimize costs. An analysis of the fee structure indicates that for the end user, using the digital euro for basic purposes – such as person-to-person transfers and point-of-sale payments – is intended to be free. The lack of transaction fees for retail customers is the foundation of the ECB's strategy aimed at mass adoption. Merchants, however, will pay a commission, but according to the project's assumptions, it will be centrally regulated and significantly lower than the current interchange rates charged by card operators. This price difference is expected to be the main factor encouraging stores to actively promote the new payment method.

The selection of 36 partners is an attempt to create an acceptance network that will be dense enough from day one to represent real competition for existing standards. The ECB is not building the system from scratch in isolation. It is utilizing existing banks and fintechs to avoid the problem of a lack of terminals capable of handling the new currency. If a customer can pay with the digital euro in the banking app they use every day, the barrier to entry becomes almost unnoticeable. This "hybrid" approach allows for the use of an existing user base instead of building a separate ecosystem from the ground up.

36 ECB partners: Alliance architecture

According to information from July 2026, the ECB has selected the entities that are to provide the technological layer of the new currency. The partners have been divided into groups with different competencies, which is intended to guarantee the stability of the system in the 19 countries of the eurozone.

The selection of this group suggests that Frankfurt is betting on a proven management model. Traditional banks are to provide a sense of security and compliance with AML regulations, while fintechs are to ensure that the digital euro is as convenient to use as Apple Pay or Google Pay. It is an attempt to combine the stability of a state institution with the innovation of the private sector, which is intended to minimize the risk of system failures.

Will the user have to change their habits?

The ECB's strategy assumes full integration with existing banking apps. The user will not receive a new "account at the ECB," but a digital wallet integrated with their account at their current bank. Technically, it will look like exchanging monetary units for their digital equivalent within a familiar app. Identity verification processes will be transferred to commercial banks, which will eliminate the need for tedious registration.

For the consumer, this means that at the checkout in a store, they will choose between a Visa card and a "digital euro" on their smartphone. If the merchant receives lower commissions, the ECB hopes that stores will actively promote the new payment method by offering discounts to those paying with the digital euro. This is a market mechanism that is ultimately intended to force a decline in the market share of plastic cards.

Rivalry with the dollar: The role of stablecoins

The ECB openly admits that the digital euro pilot is a response to the growing popularity of stablecoins, i.e., cryptocurrencies pegged to the value of the US dollar. Many people use them for fast international transfers or as a form of capital protection. From Frankfurt's perspective, a mass shift of Europeans to USD-based stablecoins means a loss of control over the money supply in circulation.

If private entities from the USA take over the retail payment market in Europe, the ECB will lose the ability to influence the economy through monetary policy. The digital euro is intended to be a safe haven that offers the speed of stablecoins, but under the full supervision of the central bank. This is a fight over who will be the issuer of the digital money used by European Union citizens. The partnership with companies like Revolut is crucial here. These fintechs have proven that they can serve millions of customers while maintaining minimal fees. The ECB is not trying to fight modernity, but is trying to take it over by giving it legal and institutional frameworks.

Schedule: Step by step to 2027

The implementation schedule is tight, which indicates that the project is being treated as a priority within EU structures.

1. **Preparatory phase (2025–2026):** Selection of providers, laboratory system tests, work on legal frameworks.
2. **Technical testing phase (2026):** Integration of the 36 selected partners' systems with the ECB infrastructure.
3. **Pilot (2027):** Launch of limited circulation of the digital euro in 19 eurozone countries.
4. **Full implementation (after 2027):** Gradual rollout of the currency to a wide group of recipients.

Setting the date for 2027 is a clear signal to the market that the project has moved from the phase of theoretical considerations to the stage of system engineering. The ECB cannot afford to fail, which is why the involvement of such a large number of partners is intended to minimize operational risks.

Challenges: Privacy vs. Surveillance

One of the most difficult aspects of the project is the issue of privacy. Critics point out that the central bank gains insight into transactions that were previously anonymous or dispersed. The ECB assures that the system will guarantee a high level of data protection, but citizens' concerns remain alive.

On the other hand, total anonymity in the digital world is impossible due to the fight against financial crime. Regulators are in a bind. They must create a system that is transparent enough for law enforcement, yet discreet enough not to discourage the average citizen. It is a tightrope walk that will determine the ultimate adoption of the solution.

What will the citizen gain and what will the banking sector lose?

From the consumer's point of view, the digital euro is intended to be free for basic use. The lack of fees for maintaining a wallet or processing transactions is meant to be an incentive to abandon current methods. For the banking sector, the situation is more complicated. Commercial banks are forced to be partners of the ECB, which generates implementation costs. They also fear a drain on deposits. If citizens start storing money in the digital euro instead of in savings accounts, banks will lose a cheap source of funding for loans.

The ECB plans to introduce quantitative limits that every citizen will be able to hold in the digital euro to protect the banking sector from a sudden capital drain. This is a compromise intended to protect the stability of the banking system while introducing innovation.

Technical challenges of integrating 36 partners

Integrating 36 different entities into one coherent system is an engineering challenge on an unprecedented scale. Each of these companies has its own infrastructure, security standards, and data exchange protocols. The ECB must create a common denominator – a digital euro standard that will be understood by Deutsche Bank's systems just as well as by Revolut's systems.

This is not just a matter of writing code. It is a matter of unifying regulatory standards across 19 different jurisdictions which, despite having a common currency, still have specific banking regulations. The success of the 2027 pilot depends on whether it is possible to create a flawless interface that will not cause technical problems with millions of transactions per day.

Is this the end of the plastic card era?

Although payment cards seem indestructible, the history of technology shows that every dominance eventually ends. Once, people paid with cash, then with checks, and today with plastic cards. The digital euro is a natural evolution of this path. If the system offers users tangible benefits – lower costs, greater speed, security guaranteed by the ECB – the transition to digital money could become widespread faster than skeptics assume.

However, the problem of the so-called "last mile" remains. Stores must want to install new software, and customers must want to use it. If the digital euro requires the merchant to purchase a new terminal, this could slow down adoption. The ECB will likely aim for current terminals to support the new system through software updates.

The role of Deutsche Bank and Revolut in the tests

Why did the ECB choose these two entities as the faces of the pilot? Deutsche Bank represents stability and experience in handling large financial volumes. It is a guarantor that the system will not fail at critical moments. Revolut represents modernity – it is a company that built its power on ease of use and an understanding of the needs of the younger generation.

Together, they form an ideal tandem for the regulator. The ECB needs both of these worlds to convince both conservative bank customers and digital nomads. If the tests involving these two giants are successful, the path to mass implementation will be open.

Risks: What could go wrong?

Every project of this scale carries risks. First – technical errors. System failures on a continental scale would be a PR disaster. Second – resistance to cyberattacks. A centralized system is a tempting target for hackers supported by hostile states. Third – lack of user interest. If citizens decide that the digital euro offers them no advantage over current cards, the project could become a "dead currency."

The ECB must not only build the infrastructure but, above all, conduct an educational campaign that explains why the digital euro is better than Visa and Mastercard. This is a marketing challenge that central banks rarely have to face.

Economic perspective: Sovereignty at a price

Economic analysis indicates that having one's own payment system is a necessary condition for maintaining economic independence in the 21st century. Dependence on external operators is, in essence, dependence on their pricing and regulatory policies. The digital euro is not just a new currency – it is an infrastructure that is intended to allow Europe to decide its own financial fate.

Will this be achieved by 2027? The deadlines are extremely ambitious, but the ECB's determination is visible. The selection of 36 partners is a clear signal that there is no turning back. Europe is entering a new stage of its financial history, in which a payment card with the logo of an American giant may become a relic of the past.

Questions and answers

When will I be able to pay with the digital euro in a store?

The pilot involving 36 selected institutions, including Revolut and Deutsche Bank, is scheduled to begin in 2027 in the 19 eurozone countries.

Why does the ECB want to replace Visa and Mastercard?

The main goal is to regain Europe's financial sovereignty and make European payments independent of decisions made by American operators and their settlement systems.

Are only the largest banks participating in the tests?

No, the ECB has opted for diversification. Among the 36 partners are both global traditional banks and innovative fintechs, which is intended to ensure broad system functionality.

Will I have to open a new account to use the digital euro?

Probably not. The ECB aims for the digital euro to be integrated with the banking apps you already use, which will allow for a smooth transition to the new system without formalities.

Will the digital euro replace cash?

The ECB has repeatedly emphasized that the digital euro is intended to be a supplement, not a total replacement for physical cash, which will remain in circulation.

What happens if the system fails?

The infrastructure is to be built with the highest level of redundancy in mind, and the involvement of many partners is intended to prevent payment paralysis in the event of problems on the part of one of them.

Analysis of available data indicates that the ECB is not only carrying out a technological project but is conducting a geopolitical operation. Maintaining the euro's position in a world dominated by digital stablecoins and American card networks requires Frankfurt to take quick and decisive action. The selection of 36 entities is an attempt to disperse operational risk among many players, which is intended to secure the system against point failures. However, if the tests reveal gaps in privacy or too much intrusiveness into the banking sector, the project may encounter political resistance in individual member states.

Implementation costs, although spread across 36 partners, remain a significant burden for the European financial sector. Commercial banks will have to balance the loss of revenue from traditional card transactions with potential profits from new services based on the digital euro. Will 2027 turn out to be the actual end of the era of American dominance in payments? The answer depends on whether the ECB manages to convince not only merchants but, above all, millions of citizens skeptical of digitalization to use its product.

It is worth noting that no other currency in the world has attempted to implement such a centralized, yet distributed-partner-based retail payment system. It is a kind of experiment on the living organism of the European economy. If the system gains trust, it will become a standard setting the direction for other central banks that are also looking for an escape from the dollarization of their financial markets.

The question remains about the final shape of privacy regulations. If the ECB does not find a golden mean between supervision and discretion, the digital euro may share the fate of other projects that, despite technological advancement, never gained mass acceptance. Success depends on Frankfurt's flexibility in adapting to user needs, and not just on top-down standards.

The coming months will likely bring further details regarding the technical framework for cooperation between Deutsche Bank and Revolut. How these two, extremely different entities, agree on the issue of transaction data exchange will be the best indicator of the success of the entire undertaking. Europe looks at Frankfurt with hope, but also with a great deal of uncertainty, knowing that a potential failure of the project could preserve the current state of dependence on American financial giants for years.

A final assessment of the project will only be possible after the full circulation of the currency is launched. Currently, we are in the phase of engineering the foundations upon which the future of European payments is to rest. Will the 19 eurozone countries be able to develop a common, faultless interface that not only matches Visa but surpasses it in terms of convenience? This is a question for which there is no answer yet, but the time to find it is slowly running out. The ECB has entered a path from which there is no return.

Sources

Article prepared by the Wiadomości PRO editorial team with the support of artificial intelligence. Facts come from the sources listed above.