ECB inks pacts to link digital euro with payment rails

The European Central Bank recently signed three agreements with Europe’s main payment standards bodies — the European Card Payment Cooperation (ECPC), Nexo Standards and the Berlin Group — to enable the digital euro to operate on existing payment systems rather than new, dedicated rails.

Under the ECPC arrangement, the digital euro could use the CPACE protocol to support near-field communication tap-to-pay transactions between payment terminals and phones or cards. The Nexo Standards agreement covers direct links between merchant systems and payment service providers’ back-end systems, which can speed up payment acceptance and interactions with cash machines. The Berlin Group’s specifications would let users employ a single alias across mobile devices to simplify identification and routing.

The ECB said adopting these standards will “simplify digital euro acceptance and create a uniform user experience across the euro area.” Officials framed the pacts as a way to give European payment providers clearer technical routes to market and to limit the use of dollar-denominated stablecoins in retail payments.

Piero Cipollone, a member of the ECB’s Executive Board, called the agreements a way to “make it easier for new European providers to enter the market and give European payment service providers and merchants the certainty they need to invest, innovate and compete across the euro area.”

The ECB’s 2024 Consumer Expectations Survey found 45% of respondents said they would be likely to use the digital euro in daily life. The bank has focused on making acceptance comparable to existing cashless options to address adoption barriers.

The signed agreements do not include an implementation timeline or a date for issuance. Companies that process payments will need to update terminals, merchant software and back-end operations to support the relevant standards.

The digital euro is the ECB’s central bank digital currency project intended to provide a digital form of central bank money alongside cash and bank deposits. The standards agreements are presented as steps to integrate the digital euro into current payment infrastructures rather than a final decision on public launch.