The ECB’s Digital Euro Pilot Program
The development of the digital euro has reached a critical juncture. After years of analysis, conceptual development, and technical preparation, the Eurosystem is entering a new phase with the ECB’s pilot program.
The groundwork for this was laid during several successive project phases (see Figure 1): During the exploratory phase from 2021 to 2023, the European Central Bank (ECB) developed the basic design of the digital euro and examined the scenarios in which a European central bank currency in digital form could be usefully deployed. In parallel, technical prototypes were run to test, among other things, offline functionality and the interaction between digital wallets and intermediaries.
With the start of the preparatory phase in November 2023, the project took on a much more concrete form. During this time, the first draft of the rulebook was created, which was commented on and further developed through a market consultation process involving banks, merchants, associations, and technology providers.
At the same time, the Eurosystem selected the key technology partners to develop individual components, such as the alias or offline components. On an innovation platform, around 70 market participants were able to test technical concepts and use cases to better understand both the long-term potential of the digital euro and the requirements for standards and interoperability. msg for banking participated in this partnership as a so-called “pioneer” and developed use cases for conditional payments.1
Figure 1: Roadmap for the introduction of the digital euro2
The legislative process is currently underway at the European level; it is expected to be completed by the end of 2026 and would establish the legal framework for a future digital euro. Only after this process is completed will a final decision be made on its introduction, and the next phase—the development phase—will begin. On this basis, the upcoming pilot program marks the transition from a predominantly theoretical and analytical project phase to practical testing in an operational context.
In our report“Digital Euro Unlocked – A User-Centric View on Design, Trust, and Real-World Adoption”, we have already analyzed key success factors from a user perspective and derived concrete implications for banks and PSPs.3
With the pilot program now getting underway4, the phase begins in which the strategic and conceptual considerations of the Digital Euro project will be tested for the first time under near-real conditions. The goal is to validate key functions of the digital euro, test the interaction between payment service providers (PSPs), users, merchants, and the Eurosystem infrastructure, and gain reliable insights for a potential market launch starting in 2029. The digital unit of value used in the pilot is not a digital euro in the legal sense, but a representation designed to be as technically similar as possible, issued by the Eurosystem and representing real transaction value in the form of a central bank liability. The legal basis for this construct is the Payment Services Directive 2 (PSD2).
The focus is on a twelve-month pilot operation, which is scheduled to begin in the second half of 2027. To ensure precise evaluation and maintain technical stability at all times, only a limited group of market participants will take part.
On the payment service provider side, only selected PSPs will participate, which will be determined in advance by the Eurosystem. On the merchant side, between 15 and 25 acceptance points will be integrated, covering typical everyday scenarios and thus creating a realistic test environment. The users will be 5,000 to 10,000 Eurosystem employees who will use the digital euro in various situations and thereby provide a meaningful picture of the actual user experience.
However, the pilot program will not test the digital euro’s status as legal tender, the final fee models, or widespread adoption by end customers. The pilot is not a dress rehearsal for the mass market, but rather a limited test environment in which functionality, interoperability, and user-friendliness are refined to such an extent that a subsequent rollout can be based on a solid foundation.
The four use cases in the pilot program
As part of the Digital Euro pilot, the Eurosystem is focusing on a narrowly defined scope of application. The goal is not to cover a broad spectrum of uses, but rather to test selected core functions of the digital euro under real-world conditions. The pilot therefore validates exactly four use cases that address key product features of the digital euro and cover both online and offline scenarios (see Figure 2).
The first use case concerns person-to-person (P2P) payments based on an alias or an access number in real time. In this process, one person transfers digital value directly to another by using a unique identifier in the app—such as a stored alias or an access number. A traditional IBAN entry is not required.
The second P2P use case addresses offline payments via Near Field Communication (NFC) between two devices. In this scenario, the payer and payee transfer digital values directly from device to device without an existing online connection. The transaction is immediately posted to the devices involved.
On the merchant side, the pilot will initially test person-to-business (P2B) payments via NFC using SoftPOS (a software-based payment terminal on a smartphone or tablet). In this process, the payer transfers digital values by bringing their device close to the merchant’s SoftPOS-enabled terminal.
The fourth use case is P2B in the e- and m-commerce environment. Here, the customer initiates the payment within the merchant’s payment environment and then authorizes it via the digital euro app.
From the perspective of banks and PSPs, the classification of these four use cases is clear: the focus is on validating the core functionalities of the digital euro, not on implementing additional value-added or special features.
Role and responsibilities of payment service providers in the Digital Euro pilot
PSPs play a central operational role in the Digital Euro pilot. Whilst the Eurosystem provides the central infrastructure, implementation on the user and merchant side is largely the responsibility of the participating PSPs. Participation in the pilot is subject to a structured selection and preparation process.
Entry is via a Call for Expression of Interest, which will be published from the first quarter of 2026. On this basis, the Eurosystem will select a limited number of PSPs to ensure balanced coverage in terms of geography, use cases and technical capabilities. Both banks and non-bank PSPs with a valid EU licence and the requisite operational capacity are eligible to participate.
PSPs may assume one or both of the designated roles in the pilot. As a Distributing PSP, they provide Digital Euro Services to individual end-users, either via an app provided by the Eurosystem or through integration into their own application. As an Acquiring PSP, they are responsible for connecting merchants, including the provision of SoftPOS solutions or e-commerce/m-commerce integrations.
Participation in the pilot involves specific operational tasks. These include, first and foremost, setting up the Digital Euro Services within their own system landscape. This encompasses, in particular, integration into the Digital Euro Service Platform (DESP), including technical connectivity, security requirements and backend certification. Participation in the operational pilot is only possible following successful certification. Furthermore, PSPs assume responsibility for onboarding and supporting participating users and merchants. The user base in the pilot is deliberately limited and comprises Eurosystem staff as well as a small number of selected merchants. PSPs act as the first point of contact for operational queries, disruptions and user feedback.
Finally, a key element of the pilot is the provision of continuous feedback to the Eurosystem. PSPs are expressly encouraged to provide structured feedback on insights gained from operational activities, user interactions and technical processes. This feedback feeds directly into the further development of the digital euro and serves to prepare for a potential market rollout.
For banks and PSPs, the pilot programme therefore represents less of a purely strategic positioning exercise and more of an operational reality check. Participation enables participants to gain practical experience at an early stage with processes, interfaces and responsibilities within the digital euro ecosystem, and to test their own system and organisational landscape under real-world conditions. Against the backdrop of a potential market rollout from 2029 onwards, this could provide a significant time and structural advantage over market participants entering the market at a later stage.
