European Central Bank calls for merchants to participate in digital euro pilot

The European Central Bank (ECB) has urged merchants in the euro zone to take part in a digital euro pilot, which is part of their efforts to potentially issue a retail central bank digital currency (CBDC) by 2029. The pilot will assess the technology, operational processes, and user experience of a beta version of the digital euro, which will function similarly to the digital euro but will not be considered legal tender.

The ECB's request to merchants extends beyond technical testing, as the success of a digital euro hinges on its acceptance in commercial transactions, making merchant adoption a significant commercial and policy issue.

Isadora Arredondo, vice president of global policy at Hedera, emphasizes that the project's commercial success will depend on merchants' willingness to participate. She suggests that payment service providers could offer incentives, such as reducing fees for merchants accepting digital-euro payments, to encourage wider participation and ensure consumers do not face barriers when making payments.

The ECB has already chosen 36 banks and payment firms to join the testing phase, which is slated to commence in the second half of 2027, with the potential issuance of the digital euro in 2029, pending legislation and a decision by the Governing Council. The trial will include the ECB, 19 euro-area national central banks, and selected merchants who will test online and offline transfers between individuals, in-store payments, e-commerce purchases, and mobile-commerce payments.

While legislation enabling the digital euro has not been finalized, the ECB is moving forward with the project due to concerns that private dollar-backed stablecoins, such as Tether's USDT and Circle's USDC, could threaten Europe's monetary autonomy.