The European Central Bank has invited licensed payment service providers (PSPs) to help shape the long-awaited digital euro as it enters its pilot phase—a chance to prove the currency still has a role in the global payments landscape.
Participating PSPs will test the technical and operational readiness, evaluate the user experience, and experiment with communication, branding, and marketing approaches. The digital euro is expected to launch in the second half of 2027.
What PSPs Should Look For
Feedback from PSPs will influence the asset’s technical development, helping to identify and avoid potential pain points before its official rollout.
“If PSPs have to rebuild plumbing every time a spec or nuanced change is made, this won’t work, so it needs to have solid API and software development kits for integration,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “It needs to be simple and easy to use and integrate. They need to push for a credible, banking type commercial model.”
“The liability and fraud part is going to be tricky, so they need to ask for clear and specific rules for these types of situations,” he said. “They also need a ‘standardized integration’ stack or package to enable seamless integration and greater adoption. No one participating should be reinventing the wheel here, but a solid framework needs to be in place or it won’t gain traction.”
One drawback of the pilot is that PSPs are expected to build, onboard, certify, and operate the digital euro at their own expense. As a result, participation is likely to be limited to the largest players.
A Difficult Path
The digital euro’s journey has been challenging since its inception in 2020. Originally designed to counter the growing influence of foreign currencies and global payment networks such as Visa and Mastercard, it now faces competition from stablecoins, which have assumed a key role in cross-border payments—one the digital euro was meant to fill.
The pilot may be the final test to determine whether the digital euro can carve out a meaningful place in payments. But the question remains: does it still have a future?
“There are a lot of nuances there, but the short answer is no,” Hugentobler said. “I think what the current administration is doing and pushing for will strengthen stablecoins and the U.S. dollar even more, potentially squeezing out others.”
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