The Digital Euro: What It Could Mean for Payments in Your Business

Why the digital euro matters for small businesses too

When a customer pays in a shop today by card or smartphone, payments in Europe largely run through international card schemes and providers based outside the EU. The merchant pays a fee for every payment. The digital euro is meant to create a European alternative that works throughout the euro area. It therefore directly affects the checkout, the fees, and the processes of retailers, tradespeople, and service providers.

This piece asks: what would the digital euro actually change for payments in a small or mid-sized business, and do owners need to act today? To answer it, we first clarify what the digital euro is, then the state of legislation, then a model for why new means of payment take hold or not, and finally what can be prepared.

A new means of payment does not take hold because it is legislated, but because customers and merchants want it at the same time.

What is the digital euro?

Most of the money we use every day is commercial bank money, a balance in an account with a bank. Central bank money, by contrast, is a claim directly on the central bank. Cash has so far been the only form of central bank money that individuals and businesses can hold. The digital euro would be the second: a digital balance backed by the Eurosystem, that is, the European Central Bank (ECB) and the national central banks such as Germany's Bundesbank.

According to current plans, the digital euro would work online and offline. Offline means that two devices can exchange a payment directly without a network connection, with privacy protection close to that of cash. Access would be provided by banks and other payment service providers, for example through their apps, supplemented by a Eurosystem app.

An important element is a holding limit. Individuals would only be allowed to hold a limited amount in digital euros so that money is not withdrawn from bank accounts en masse in a crisis. Brühl (2025) describes how this is to be solved technically: if an incoming payment exceeds the limit, the excess is automatically transferred to the linked bank account. If the balance is not sufficient for a payment, the missing amount is automatically topped up from the bank account. The level of the limit is still politically open.

This makes it fundamentally different from bitcoin or stablecoins, which are issued by private parties. What those mean for businesses is discussed in Crypto as a means of payment and Stablecoins and MiCA.

Where does legislation stand in November 2026?

The European Commission presented its draft law in June 2023. Since then the project has moved forward several steps, but it has not yet been adopted. The following overview summarizes the main stages.

1. June 2023: Commission proposal

   The Commission presents a draft regulation that would make the digital euro legal tender alongside cash.

2. December 19, 2025: Council position

   Under the Danish presidency, member states agree on their negotiating mandate, with online and offline functionality.

3. July 9, 2026: Parliament position

   The European Parliament confirms its negotiating mandate in plenary by 416 votes to 169 with 22 abstentions.

4. Since July 13, 2026: negotiations

   Parliament, Council, and Commission negotiate a common text in the so-called trilogue. The aim is a political agreement by the end of 2026.

5. From 2027: ECB pilot phase

   The ECB plans a pilot phase with selected payment service providers for the second half of 2027.

6. 2029 at the earliest: possible issuance

   If the law is adopted in 2026, the Eurosystem aims to be ready to issue the digital euro for the first time from 2029.

Whether agreement will be reached by the end of 2026 is open at the time of writing. The year 2029 depends explicitly on it. If the law is delayed, issuance will be delayed too.

What would change for merchants and service providers?

For businesses, three questions matter most: whether they have to accept the digital euro, what it costs, and how the money reaches them. On all three there are positions from the Council and Parliament that partly differ. The following overview is based on the law firm Freshfields' analysis of both mandates from July 2026.

Some provisional conclusions can be drawn. A business would generally not accumulate digital euros itself. Incoming payments would land in its ordinary business account, much like a card payment. Fees would be capped, benchmarked against comparable private payment methods. Whether a small business would be obliged to accept the digital euro depends on the outcome of the negotiations.

Why does a means of payment take hold? The two-sided market model

A useful model for the question of whether the digital euro will be used is the two-sided market, which Rochet and Tirole (2003) described using card payments as an example. A payment system has two sides that need each other: customers who want to pay with it and merchants who accept it. For customers it is only worthwhile once many merchants accept it, for merchants only once many customers pay with it. Economists call this network effects.

An everyday analogy makes this tangible. A fax machine was worthless as long as nobody else had one. Only when enough business partners could receive faxes did buying one pay off for everyone. New means of payment face the same chicken-and-egg problem.

Legislators try to solve this problem with two levers. The acceptance obligation ensures that the merchant side is there from the start. Legal tender status is meant to create trust. Brühl (2025), however, points to a third side the model often forgets: the banks and payment service providers that are supposed to bring the digital euro to customers and merchants. Because it could partly displace their own payment offerings and reduce their fee income, they need a viable compensation model, according to his analysis. Without that incentive, Brühl argues, they would hardly promote the digital euro, and the large public and private investments could be wasted.

Opportunity or burden? Two perspectives for businesses

How you assess the digital euro from a business's point of view depends on which problem you consider bigger.

Balz (2026), a member of the Bundesbank's executive board, argues for the opportunity perspective. He sees the digital euro above all as a contribution to the resilience of European payments, because dependencies on critical infrastructure can become a risk when external conditions change. He describes privacy protection and holding limits not as add-ons but as prerequisites. This is the position of an involved institution and should be read as such. Ahmad (2026), in a literature review on central bank digital currencies, stresses that trust and privacy determine use and points to survey experiments in which strong privacy guarantees markedly increased willingness to adopt.

For small businesses I consider the fee question the most important point. If the caps are noticeably below today's card fees, the digital euro becomes interesting for merchants, regardless of political arguments. If they are on a par, customer behavior alone decides. How strongly businesses depend on a few platforms and payment providers is described in Dependence on platforms.

How to assess the fee question for your business

How much a business could save in payment fees can only be shown as a worked example today, because the caps have not been set. The calculation nonetheless helps you see the order of magnitude for your own business.

The rates in this worked example are freely chosen and not a forecast. The calculation only shows that the effect depends on your own card revenue and on what share of customers actually switch. For an engineering office paid almost entirely by bank transfer, the issue is small. For a café or a retailer with many small card payments, it can be noticeable.

What you can do today

There is no need to act today. It is worth preparing three questions, however, so you can decide quickly once the law is in place.

• Costs: determine total payment costs for the past year, broken down by cash, card, and bank transfer.
• Checkout: ask your till or terminal provider whether and when it plans to support the digital euro.
• Account: ask your bank how incoming digital euro payments would be booked to your business account.
• Check the state of negotiations once a quarter, for example on the ECB or Bundesbank websites.
• When renewing terminal contracts, look for short terms.

If you are planning other changes to payments at the same time, think them through together. The e-invoicing requirement from 2027 changes processes for business customers, as The e-invoicing requirement shows. How to speed up incoming payments overall is described in Late payment and receivables management.

Conclusion: what does the digital euro mean for payments in your business?

We began by asking
the digital euro would change for payments in a small or mid-sized business and whether owners must act today. The answer has two parts. Technically and legally, less would change for businesses than the debate suggests: payments would arrive in the business account, fees would be capped, and holdings by companies are to remain limited. Economically, everything depends on whether customers use it and how high the fee caps turn out to be.

For the next two years, watching is the appropriate stance, though not waiting without preparation. If you know your payment costs and what your till provider and bank are planning, you can decide quickly. Whether the digital euro succeeds will in the end be decided not by laws but by customers at the checkout.