Digital Euro Gives US Payments Firms a CBDC Test Case

The digital euro is moving out of central bank planning and into checkout, with implications for merchants in the United States and payments providers.

The European Central Bank opened applications Sept. 15 for eCommerce and mobile commerce merchants to join a 12-month digital euro pilot expected to begin in the second half of 2027. Applications close Oct. 27. The merchants will join 36 payment service providers already selected to test how a beta digital euro works through commercial payment infrastructure.

For U.S. processors, acquirers, payment platforms and merchants operating in Europe, the pilot offers a central bank digital currency test case even though the U.S. itself is not developing a retail digital dollar. It will put a CBDC through PSPs and merchant checkout and provide evidence about what existing payment infrastructure can be used and what additional work is required.

The journey toward deployment is particularly relevant in cross-border commerce, where supporting local ways to pay is already part of doing business.

The PYMNTS Intelligence report “Payments Optimization: Powering Global eCommerce Growth” found in May that 99% of consumers who shop cross-border want to use their preferred payment methods, while 57% said they select retailers based on the payment methods accepted.

If a digital euro is eventually issued and consumers use it, U.S. firms serving European customers would have to decide whether and where it belongs in that payment mix. The pilot provides an early look at what such a decision could entail.

The ECB selected 36 PSPs in July after receiving more than 50 applications. The group includes banks and nonbank providers from across the euro area. Some will provide the beta digital euro to individual users, others will provide acquiring services to merchants, and still others will perform both roles. Participating PSPs must develop pilot payment services, connect to the digital euro service platform, conduct user testing, complete back-end certification and onboard users before the operational phase begins.

And, as a read-across, a U.S. processor or acquirer with European operations can see where a CBDC connects to systems it already operates and where a separate integration is necessary.

Merchants Put the CBDC Into Checkout

Selected online merchants will work with an acquiring pilot PSP and provide a dedicated or suitably adapted checkout flow so the beta digital euro is available only to eligible pilot users. Acquiring PSPs will provide the payment acceptance solution along with onboarding, technical integration guidance and operational assistance. Merchants can also use technical service providers.

For payments firms, there’s a movement beyond the theoretical use of CBDCs toward evidence about how much work is involved when a retail CBDC is added to the systems already connecting consumers, PSPs and merchants. The exercise does not mean the ECB has decided to issue a digital euro.

U.S. payments firms, international merchants and their payment providers already manage different payment preferences from market to market. A digital euro could eventually become another local payment option for companies selling into the euro area. Whether it does depends on issuance, consumer use and merchant demand, none of which the pilot can establish. The pilot will determine more basic facts about the infrastructure.

For U.S. payments companies with European operations, the digital euro pilot will provide an early look at whether a retail CBDC can run through existing acquiring, processing and checkout infrastructure, and where new technology or operating processes are required.

For all PYMNTS digital transformation coverage, subscribe to the daily Digital Transformation newsletter.