Q6: What value would the digital euro offer payment service providers?

The European Central Bank answers:

Supervised payment service providers (PSPs), such as banks, would play a key role in distributing the digital euro. They would act as the main point of contact for individuals, merchants and businesses for all digital euro-related matters and would perform all end-user services.

The digital euro could also provide additional business opportunities for PSPs, giving them an immediate euro area-wide reach.

The ECB’s innovation platform demonstrated the digital euro’s potential to unify the European payments market and unlock new business models through harmonised standards and to support future technological developments. The ECB is using the findings of the innovation platform to inform the further development of the digital euro.

Thus, the digital euro could serve as a platform for PSPs to develop value-added services within their offer (e.g. conditional payments or loyalty programs).

Moreover, the digital euro compensation model, as currently envisaged in the European Commission’s proposed digital euro Regulation, provides PSPs with economic incentives comparable to other digital means of payment.

We answer them:

The burden of onboarding and support of customer and merchants is placed onto payment service providers (PSPs), with no existing cost model (KF4). A recent study among 19 European banks of different sizes, regions and business models estimates costs of €110 million per bank for introducing the mandatory infrastructure for the digital euro. This number does not even include costs related to the offline version and merchant acquiring [1].

On the other hand, economic incentives for PSPs similar to those of other digital means of payments beg the question of where cost benefits for the digital euro will come from.

Reasons for PSPs to focus on domestic markets have less to do with a fragmention of payment systems in the common European market— after all, citizens of the eurozone can already use the euro electronically and as cash since at least 2002 in the whole area, introduced for exactly that purpose. Rather, differences in legal frameworks and regulatory requirements within the euro area, e.g. regarding KYC and KYB requirements, are holding them back from reaching further than the domestic market. The introduction of a digital euro will not automatically change such fragmented regulatory and legal frameworks.

  1. PwC, Digital Euro Cost Study, 2025.