EU pushes digital euro to cut reliance on US card networks

The European Union is pressing ahead with plans for a digital euro, entering the final stretch of negotiations aimed at building a homegrown payment system that would curb the bloc's dependence on Visa ↗ 0.99% and Mastercard ↗ 1.01%, the American networks that process the vast majority of European card transactions.

A Sovereignty Play in Payments

The European Parliament voted in July to begin trilogue negotiations with member state governments on how the digital euro will work, with 416 votes in favour, 169 against, and 22 abstentions. Final approval is envisaged by the end of 2026, with a pilot programme involving 36 payment service providers set to begin in 2027 and retail availability targeted for 2029.europarl.europa+1

The digital euro would be an electronic form of currency issued and guaranteed by the European Central Bank, designed to complement cash rather than replace it. It would support both online and offline payments, with the ECB providing underlying infrastructure and commercial banks distributing the service to customers. Merchants are expected to pay lower fees than they currently face for card transactions.euronews

According to ECB data, Visa and Mastercard account for 61% of card payments in the euro area and nearly all cross-border card transactions. ECB President Christine Lagarde told Euronews in July that the bloc "predominantly relies on US, but also sometimes Chinese, networks to process payments," adding: "We need a European solution because we want to be sovereign at home".euronews

Private Sector Moves in Parallel

While the public infrastructure remains years away, private European initiatives are already gaining ground. On August 11, digital bank N26 launched Wero, the instant payment solution developed by the European Payments Initiative, inside its app for customers in Germany and France. The integration allows users to send and receive money in seconds using only a phone number or email address, without sharing bank details.n26+1

Separately, the European Payments Alliance (EuroPA) and EPI signed a memorandum of understanding in February to pursue interoperability between their respective instant payment networks, a move that could connect systems used by 380 million people across 15 European countries. EuroPA links national solutions including Portugal's MB WAY, Spain's Bizum, Italy's Bancomat, and Poland's Blik, while EPI's Wero covers Germany, France, Belgium, the Netherlands, and Luxembourg.dwaynegefferie.substack+2

Beyond Europe's Borders

The push for payment sovereignty extends well beyond the eurozone. In the United Kingdom, the UK Payments Initiative — backed by Barclays ↗ 0.48%, NatWest ↗ 0.64%, Lloyds, and HSBC ↗ 1.44% — went live in June to promote account-to-account payments that bypass card schemes. In Brazil, the central bank's PIX system now accounts for 54% of all transactions and has become a flashpoint in trade tensions with Washington.euronews

The most sensitive negotiations on the digital euro are expected this autumn, centring on the compensation model for banks and the fee structure across the payment chain. As ECB board member Piero Cipollone put it in January: "The need for a European payment system that meets all needs and is built on European technology and infrastructure — in other words, a system that is entirely under our control" — has only grown.euronews+1