The Digital Euro: four futures that will reshape Europe’s payment landscape

PaymentGenes Consultant David Núñez Corona shares four possible scenarios on how the digital euro will reshape Europe’s payment landscape.

BASED ON: Digital Euro: Opportunities, Challenges, and Strategic Implications for the Eurozone (PaymentGenes Consultancy, 2025) 

Europe is entering a decisive phase in the evolution of money. Following the European Central Bank’s October 2025 ‘go-decision’, the Digital Euro has moved from conceptual debate into technical preparation and ecosystem design. This transition represents more than a payment modernisation. It marks a strategic inflection point at which Europe must determine how monetary sovereignty, private-sector innovation, and public trust coexist in a fully digital financial system.

To date, most discussion has focused on what the Digital Euro is: a retail central bank digital currency, legal tender, privacy-preserving, offline-capable, and distributed through banks and payment service providers. The more consequential question for 2026 and beyond is what the Digital Euro will become once adoption dynamics, commercial incentives, and policy choices begin to shape its role in the market.

At PaymentGenes Consultancy, we do not view the Digital Euro as converging toward a single, predetermined outcome. Instead, our analysis suggests it may evolve along one of four strategic trajectories, each reflecting a different balance between public control and private-sector innovation. These scenarios are not forecasts. They are frameworks to help market participants prepare for structurally different futures.

Why the Digital Euro matters now

The case for a publicly governed digital form of money has become unavoidable. Three structural forces are converging:

Sovereignty pressure.

Dollar-denominated stablecoins are increasingly functioning as a global digital dollar, while China’s e-CNY continues to scale through domestic usage and cross-border pilots. Absent a credible European alternative, Europe risks becoming a price-taker in standards, infrastructure, and data governance it does not control.

Infrastructure fragmentation.

Despite SEPA, Europe’s payments landscape remains fragmented across domestic schemes, uneven instant-payment adoption, and proprietary bigtech wallets. This limits scalability, interoperability, and resilience at a pan-European level.

Declining cash usage.

In highly digitalised markets such as the Netherlands, where cash represents roughly 7% of point-of-sale transactions, citizens’ direct access to central-bank money is steadily eroding.
Against this backdrop, the Digital Euro is not designed to replace existing rails such as cards, account-to-account payments, or wallets. Its role is to anchor Europe’s payments ecosystem in public trust, operational resilience, and long-term interoperability.

Four futures for the Digital Euro

Based on the scenario framework developed in our report and extensive discussions with banks, PSPs, fintechs, regulators, merchants, and consumers, four plausible futures emerge for how the Digital Euro could reshape the European payments landscape.

Each scenario is defined by two variables:

1. The degree of adoption achieved by the Digital Euro, and
2. Whether ecosystem development is driven primarily by public design or private innovation.

1. The open ecosystem: a competitive era of innovation

What it looks like

The Digital Euro functions as a common settlement foundation on which banks, PSPs, and fintechs build differentiated, user-facing solutions. Open APIs enable programmable payments, instant settlement, cross-border interoperability, and automated B2B and IoT use cases.

Who wins

• PSPs and fintechs that excel in user experience and interoperability;
• Acquirers that integrate the Digital Euro seamlessly across existing A2A and card infrastructures;
• Merchants benefit from lower acceptance costs and faster settlement.

Why this future is plausible

Interviews with players such as Adyen, Wirex, and J.P. Morgan indicate strong readiness to innovate, provided the ECB allows sufficient design space—particularly around conditional payments, automated reconciliation, loyalty integration, and standardised APIs.

Key risks

Fragmentation occurs if national or proprietary implementations diverge.

What to watch (2026–2028)

• Rulebook governance and API openness;
• Merchant pricing and cost-recovery models;
• Sandbox frameworks for programmable use cases.

2. The public utility: a Digital Euro for resilience and inclusion

What it looks like

The Digital Euro becomes a pan-European public payments layer: universally accepted, privacy-preserving, operational during outages, and tightly integrated with the EU Digital Identity (EUDI) framework. In effect, it functions as digital cash for the digital economy.

Who wins

• Citizens, through inclusion, privacy, and offline usability;
• Regulators, through increased resilience and monetary sovereignty;
• Smaller institutions that can white-label Digital Euro wallets

Why this future is plausible

National central banks, including De Nederlandsche Bank, emphasise resilience, privacy, and inclusion—particularly in markets where payment efficiency is already high and the strategic objective is preserving the role of public money rather than improving speed or cost.

Key risks

• Limited merchant enthusiasm if incentives are insufficient;
• Reduced differentiation opportunities for banks.

What to watch

• Offline functionality pilots;
• Funding and defunding mechanisms, including tiered remuneration;
• Practical implementation of legal-tender obligations.

3. The specialised use model: infrastructure for high-value flows

What it looks like

Retail adoption remains limited, but the Digital Euro becomes critical infrastructure for selected use cases, including:

• B2B settlement;
• Treasury and liquidity automation;
• IoT and machine-to-machine payments;
• Cross-border corridors;
• Conditional, contract-triggered payments.

This mirrors the role of real-time gross settlement systems today: systemically important but largely invisible to end consumers.

Who wins

• Corporates and financial institutions;
• API-native PSPs;
• Providers operating in treasury, supply-chain, logistics, and machine-economy domains.

Why this future is plausible

Banks consistently highlight that in mature markets, there is limited unmet consumer demand. The primary value lies in infrastructure efficiency—an assessment echoed by ECB simulations and industry analysis.

Key risks

Perception of weak adoption despite strong underlying utility.

What to watch

• Cross-border pilots, including G20 corridors and mBridge participation;
• Treasury and programmable settlement use cases.

4. Regulatory minimum: a digital safety net

What it looks like

The Digital Euro functions primarily as a public option—a legal-tender safety mechanism used for government payments, crisis scenarios, and limited retail transactions. Private-sector solutions remain dominant, and Europe continues to rely heavily on global card schemes and bigtech wallets.

Who wins

• Incumbent payment networks;
• Providers of traditional payment rails.

Why this future is plausible

If merchant pricing is uncompetitive, user experience is weak, or consumer value is unclear, adoption may remain limited despite legal-tender status. SEPA Instant offers a clear precedent: regulatory availability does not guarantee usage.

Key risks

Growing strategic dependence on non-European payment infrastructures.

What to watch

• Merchant pricing and scheme economics;
• Wallet experience and cross-border usability.

Strategic Implications

Across all scenarios, one conclusion is clear: the Digital Euro will not replace Europe’s payments ecosystem—it will reconfigure it.

Banks

• Prepare for multi-wallet, multi-rail architectures;
• Strengthen identity, KYC, and liquidity-management capabilities;
• Develop Digital-Euro-native services such as conditional payments.

PSPs and fintechs

• Use open APIs to drive differentiation;
• Compete on user experience, programmability, and cross-border reach;
• Integrate the Digital Euro alongside existing fiat and digital-asset rails.

Merchants

• Prepare for instant settlement and lower-cost A2A flows;
• Integrate Digital Euro acceptance into unified checkout experiences;
• Leverage programmability for refunds, loyalty, and reconciliation.

Regulators and policymakers

• Maintain a level playing field vis-à-vis bigtech wallets;
• Ensure interoperability across payment rails and borders;
• Communicate clearly on privacy, legal tender, and user value.

The road ahead (2026–2032)

The Digital Euro’s impact will materialise incrementally through pilots, merchant adoption, and real-world usage. However, decisions taken over the next 24 months—particularly around wallet design, merchant pricing, interoperability, and governance—will determine which trajectory ultimately prevails.
For European financial institutions, this is not a moment for passive observation.

It is a moment to test, align, and prepare.

Europe is not merely introducing a new payment method.

It is redefining the role of public money in the digital age.

About author

David Núñez Corona is a Consultant at PaymentGenes, advising banks, fintechs, and global corporates on strategy and M&A within the payments sector. He leads PaymentGenes’ work on the Digital Euro and broader CBDC developments, supporting the firm’s research and market perspectives on evolving payment infrastructures.

 

 

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