Europe’s plans for a potential central bank digital currency are moving closer to real-world testing after the European Central Bank selected 36 payment service providers from across the euro area to participate in a year-long digital euro pilot.
Scheduled to begin in the second half of 2027, the exercise will test the digital euro’s technical functionality and operational processes while helping the European Central Bank (ECB) refine the payment experience for users. The pilot will support continuing preparations for the possible issuance of a digital euro but does not represent a decision to launch the currency.
The ECB selected the participants after issuing a call for expressions of interest in March 2026. The Eurosystem received more than 50 applications from payment service providers, indicating strong market interest in the initiative.
Applicants were assessed against a set of predefined eligibility criteria. The 36 selected participants include banks and non-bank providers representing different business models, institutional sizes and areas of the eurozone.
Broad market participation
The ECB said the participants’ broad geographical reach would provide a diverse and representative environment in which to test the digital euro and draw lessons from its use.
Piero Cipollone, an ECB Executive Board member who chairs the High-Level Task Force on a digital euro, said the strong market response demonstrated that the private sector was prepared to participate actively and move quickly with the project.
He said the initiative could strengthen Europe’s payment landscape, adding that the ECB looked forward to deeper cooperation with European payment service providers as it worked to develop a secure, efficient and inclusive digital euro.
The exercise will use a beta version that will be functionally and technically close to the digital euro envisaged in the draft European legislation. However, the beta currency used in the pilot will not have legal tender status.
The participating companies will perform different functions. Some, described as distributing payment service providers, will allow Eurosystem employees to access beta digital euro services.
These services will include opening beta digital euro accounts and making payments. Other participants, known as acquiring payment service providers, will work with selected merchants and allow them to receive beta digital euro payments.
Some providers will perform both distributing and acquiring functions during the exercise.
Testing across Europe
The pilot will be conducted at the ECB and 19 national central banks across the euro area. Participating countries are Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
The design also recognizes that selected payment service providers may offer pilot services in countries other than those where they are established.
Participants will include employees from the ECB and participating national central banks, alongside e-commerce businesses and merchants offering everyday services at physical locations, including cafeterias and restaurants.
Central bank employees participating in the pilot will be able to make beta digital euro payments between individuals both online and offline.
They will also test person-to-business transactions at physical points of sale, including payments using Software Point of Sale technology. E-commerce and mobile payments will form part of the trial as well.
Payment experience tested
The exercise will allow the Eurosystem to assess how the digital euro operates across different payment environments, ranging from direct transfers between individuals to purchases made online or at physical merchant locations.
The findings will be used to refine the digital euro’s design and improve the user experience before any decision is made on potential issuance.
The ECB plans to publish regular updates on the exercise through its dedicated digital euro pilot webpage, allowing stakeholders to follow its progress and the lessons emerging from the tests.
The selected payment service providers will now work with their respective national central banks and the ECB to make the technical and operational preparations required before the pilot begins.
The exercise represents a significant step in the digital euro project because it moves testing beyond internal design work and into a broader environment involving payment companies, central banks and merchants.
However, the beta currency will remain limited to the controlled pilot and will not carry the legal status of euro cash or existing central bank money available to the public.
Path toward 2029
The ECB has been studying a digital version of the euro for several years as electronic payments expand and Europe seeks to reinforce the resilience and strategic autonomy of its payment system. The digital euro would be electronic central bank money for everyday use rather than a cryptocurrency or privately issued stablecoin.
The pilot follows an earlier announcement in October 2025, when the ECB said initial digital euro transactions could begin through a test exercise in 2027. At the time, the central bank said the Eurosystem could be ready for a potential first issuance in 2029, provided the required European legislation was adopted on schedule.
Any full launch remains dependent on the European Union completing the project’s legislative framework and the ECB Governing Council making a final issuance decision. Discussions involving the European Parliament, the Council of the European Union and the European Commission have continued over matters including privacy, holding limits, merchant obligations and financial stability.
The proposed digital euro would complement physical cash rather than replace it. It is designed to give consumers access to public money in digital form for payments between individuals, in stores and online.
Digital cash alternative
Under the design being discussed, consumers could access the digital euro through banking applications or a dedicated payment interface. Services would support both online and offline transactions, with the offline function intended to allow payments when an internet or mobile connection is unavailable.
The digital euro is also expected to be non-interest-bearing, distinguishing it from a bank deposit or investment product. Policymakers have discussed imposing a limit on individual holdings to reduce the risk of large transfers from commercial bank deposits into digital euros, particularly during periods of financial stress.
Privacy has remained a central part of the debate. The proposed framework aims to provide a higher degree of privacy for offline payments, while online transactions would remain subject to the legal requirements applied to digital payments, including rules against money laundering and terrorist financing.
The ECB also views the project as a way to reduce the euro area’s dependence on payment systems operated by companies based outside Europe. A public digital payment option could reinforce the availability of central bank money as consumers increasingly move away from cash for everyday transactions.
Costs and concerns
Commercial banks have raised concerns that the project could reduce their deposit base and require substantial investment in new payment infrastructure. The ECB estimated in February 2026 that implementation could cost European banks between EUR4 billion and EUR6 billion over four years, equivalent to around 3 percent of their annual information technology maintenance expenditure.
The ECB expects to spend about EUR1.3 billion establishing the digital euro system, with annual operating costs estimated at approximately EUR300 million. It has argued that banks could recover part of their investment through fees charged to merchants for digital euro payment services.
For consumers, basic digital euro services are intended to be free. The ECB would provide the underlying infrastructure without charging payment providers for access to the network, while merchant fees would be regulated.
The 2027 pilot will therefore test more than the currency’s technical performance. It will also help determine how banks, non-bank payment companies, merchants and consumers could interact within a digital euro ecosystem before policymakers decide whether the currency should move toward full issuance.
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