The Digital Euro – a proposed form of digital cash that would allow easy cross-border A2A payments within the Eurozone for goods and services – could revolutionise how people pay online in Europe, with huge implications for the telemedia and DCB industries.
A proposed electronic form of cash issued and backed by the European Central Bank that would allow consumers and businesses across the eurozone to make digital payments directly using central bank money, alongside physical banknotes and coin, the Digital Euro represents one of the most significant potential changes to European digital payments in more than a decade.
Much of the telemedia sector today relies on card payments, wallets, direct carrier billing (DCB), account-to-account payments and various local payment methods. A successful digital euro would introduce a new payment rail backed by the European Central Bank, potentially creating an alternative route for digital content purchases, subscriptions and value-added services.
This matters because payment costs have become an increasingly important issue across digital services. As margins tighten and customer acquisition costs rise, merchants and service providers are under pressure to reduce transaction expenses wherever possible.
If the digital euro can genuinely offer lower costs than cards and other payment methods, it could become attractive for everything from digital media subscriptions and gaming purchases to mobile content and mVAS services.
However, if merchants perceive the digital euro as simply another payment option carrying similar or higher fees, adoption could be slow despite mandatory acceptance requirements.
DCB in the firing line?
The debate is particularly relevant for carrier billing providers. Direct carrier billing has traditionally positioned itself as a premium payment method that offers reach, convenience and accessibility, especially for consumers without cards or bank accounts. However, DCB also carries higher transaction costs than many conventional payment methods.
Should the digital euro emerge as a low-cost, instant settlement mechanism with broad consumer adoption, it could create a new competitive dynamic for digital content payments. Some low-value purchases that currently flow through cards or carrier billing could potentially migrate to a central bank-backed digital currency, particularly if consumers are incentivised to use it.
At the same time, the digital euro could also create opportunities for telecoms operators. Mobile operators already possess the customer relationships, authentication infrastructure and mobile app ecosystems that could support digital euro wallets and services. Much as operators became key participants in mobile money ecosystems in parts of Africa and Asia, European telecoms firms may find themselves playing an important role in digital euro distribution, identity verification and customer onboarding.
The offline element of the digital euro proposal is especially interesting. The ability to conduct transactions without a live network connection introduces resilience that most existing digital payment methods lack. For telecoms operators and digital service providers, this raises new possibilities around payments in areas with limited connectivity, during network outages, or in emergency situations where payment continuity becomes critical.
The fees could see Digital Euro collapse
However, the Digital Euro is far from a done deal. EuroCommerce, which represents retailers and wholesalers across Europe, has urged Members of the European Parliament to rethink the proposed fee structure for the digital euro, arguing that current proposals risk making the currency unattractive for merchants and consumers alike.
As negotiations continue in Brussels over how the proposed digital euro currency should operate, retailers are warning that the success or failure of the project may ultimately come down to a deceptively simple issue: who pays the fees.
EuroCommerce believes recent compromise proposals around Article 17 of the Digital Euro Regulation have shifted the balance away from merchants and towards banks and payment service providers (PSPs), potentially undermining one of the key objectives of the entire project – creating a cost-efficient European payment alternative that strengthens regional payment sovereignty.
At the heart of the dispute is the principle that merchants should be “better off” accepting digital euros than existing digital payment methods. EuroCommerce argues that this principle is essential because acceptance of the digital euro is expected to be mandatory for retailers. If businesses are required to support the payment method, they argue, they should at least benefit from lower transaction costs.
The trade body is calling for a capped fee model of 0.1% for transactions up to €40 and a maximum charge of four cents for larger transactions, while also demanding that offline digital euro transactions remain entirely free of fees.
While this may appear to be a technical debate about payment economics, the implications stretch much further into the wider digital commerce and telecoms ecosystem.
Ultimately, EuroCommerce’s intervention highlights a broader truth about digital payments: technology alone rarely determines success. Economics matter.
The European Central Bank may be able to build a technically sophisticated digital currency, but unless merchants, consumers and payment providers see clear financial benefits, adoption will remain an uphill battle.
For telemedia, carrier billing and digital content providers, the negotiations are worth watching closely. The final fee structure will not simply determine the cost of accepting a digital euro. It could help shape the future competitive landscape for digital payments across Europe for years to come.
