Sending money from your phone seems simple: just choose a contact, enter an amount, and press confirm. But behind these apparently simple actions lie national payment systems that are not always interoperable.
In Europe, the Madrid-based European Network for Payments (ENP) has been established to link five mobile payment solutions operating in 13 European countries: Bizum (Spain), Bancomat (Italy), SIBS-MB WAY (Portugal), Vipps MobilePay (Norway, Denmark, Sweden and Finland) and EPI/Wero (Germany, Belgium, France, the Netherlands, Luxembourg and Austria).
The combined infrastructure of these organisations covers more than 70% of the population of the EU and Norway, serving a total of around 130 million active users.
The ENP’s rollout will be gradual, beginning with payment between individuals before progressing to online shopping and brick-and-mortar businesses.
But as the EU gets ready to launch the digital euro over the next few years, the question that will spring to mind for many is: Why bother?
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The answer is that the ENP and the digital euro serve different purposes. The former is a bridge between existing payment solutions, while the latter is public money in an electronic form. The ENP connects services and bank accounts, while the digital euro will enable the use, in the digital environment, of money issued under the Eurosystem, the monetary authority of the euro area.
Systems like the ENP – or one of the many other services currently available – transfer the euros held in customers’ bank accounts. But the digital euro is neither a new currency, nor a cryptocurrency. It is electronic money issued by the European Central Bank (ECB), just like euro banknotes and coins.
The digital euro will also not replace cash or existing private electronic payment methods. These will continue to exist and be used as they are now.
For consumers, there appears to be a blurred line between existing electronic payment systems and the digital euro, particularly in the case of debit cards and Bizum. For consumers, it is evident that the digital euro carries no fees or issuance costs, and there is no private company behind the transactions. The fundamental difference therefore lies in who backs the balance, and in its terms of use.
The planned design for the digital euro will enable payments between individuals, in shops and online. An offline function
also planned.
As for the digital euro’s timeline, the ECB is considering a twelve-month pilot scheme starting in the second half of 2027, and a possible first issue in 2029, provided regulations are approved. These are projections though, not a confirmed launch date.
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Payments and strategic autonomy
Both the digital euro and the ENP could help to boost Europe’s strategic autonomy. According to the ECB, in 2022, international card payment schemes (Visa, Mastercard, American Express) accounted for around 61% of all euro area transactions. Although this figure illustrates the dominance of (mostly US-based) international payment networks, many of these transactions are processed or managed by subsidiaries, banks and technology companies based within Europe.
Direct account-to-account payments via mobile phone also contribute to financial sovereignty, as they avoid the use of international payment systems.
Dependence on these non-European providers forms part of the debate on EU autonomy and resilience. The development of the ENP and the digital euro could thus be seen as a strategy for digital and financial sovereignty at a time when there is a drive for “360-degree” European sovereignty that covers energy, technology, defence, computing and finance.
Trust, privacy, data
Trust will be a key factor in whether people are willing to use the digital euro. An exploratory survey in Spain showed how perceived trust in the ECB led to a greater willingness to use the digital euro, while concerns about data privacy had the opposite effect.
Although these figures cannot be extrapolated to the entire European population, they do highlight issues that the digital euro’s design and public communication will need to address. Credibility and privacy are both closely linked to who manages the data, whether this is private providers or public institutions.
What the digital euro won’t do
A Europe-wide payment network does not render the digital euro unnecessary. It can help familiarise users with digital payments via mobile devices and cross-border transactions, and demonstrate the value of connecting existing national infrastructures. The ENP will facilitate cross-border payments using existing private solutions.
Furthermore, some services already apply part of the operating logic of the future digital euro in physical shops. In Spain, for example, Bizum Pay allows contactless payments to be made via phone in physical shops directly from a bank account, and the transaction can even be completed if the phone loses its internet connection.
The digital euro will be a public way of bringing the euro to people’s phones. The key issue will be whether citizens perceive it as a tangible improvement in terms of trust, privacy, accessibility and ease of use. Without these visible benefits, any monetary innovation runs the risk of being nothing more than an institutional promise.
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