Iberpay joins Spanish banks to launch a digital euro proof of concept

Apart from Iberpay, banks such as BBVA, Sabadell, Santander, ING and Deutsche Bank will take part in the Proof-of-Concept trials, joined by payment services organisations Bizum and Redsys. 

While the group admits that the trials are linked to the potential issuance of a central bank digital currency, the decision on whether to issue a digital euro or not will only arrive after the completion of the Eurosystem CBDC research, which is scheduled to complete in October 2023. 

For now, the Spanish banks are analysing how a retail CBDC would be included in the current payment infrastructures, including processors, banks, and offerings such as the local instant payment system Bizum. 

The main priorities of the European Central Bank (ECB) include in-store payments, ecommerce payments, and person-to-person (p2P) transfers. During the trials, the banks will take on the roles of intermediaries and custodians of the CBDC accounts. 

Here’s the complete list of the Spanish banks that will participate in these trials: BBVA, Banco Sabadell, Banco Santander, Abanca, Arquia, Banca March, Banca Pueyo, Banco Caminos, Banco Mediolanum, Bankinter, Caixa Guissona, Caixa Ontinyent, Caja de Ingenieros, Cajalmendralejo, Cecabank, Deutsche Bank, Eurocaja Rural, EVO Banco, Grupo Caja Rural, Grupo Cajamar, Ibercaja, ING, Kutxabank, Laboral Kutxa, N26, Openbank, Orange Bank, Targobank and Unicaja Banco.

Investigating the impact of the digital euro on the payments market 

According to a report from the European Banking Federation, the impact of a digital euro on the payments market would depend on its primary focus. To clarify, its role would depend on which use cases it would cover and what design features would result from this. 

The EBF emphasises that a comprehensive assessment should be carried out by the ECB and the industry regarding the investment required by European banks to enable a digital euro ecosystem as intermediaries and the use cases and business models around the digital euro, also considering possible overlap and displacement of current payments systems in terms of usability and revenues. 

Moreover, payment solutions should continue to be developed by the industry to ensure that the digital euro is adequately embedded in the payment product offer that is already existing in the market. The report also suggests that appropriate access to data for the involved intermediating bank is important to support the provision of secure and convenient financial services that respond to customer needs.