The PaySys study reaches the conclusion that the digital euro, if it were to be designed as set out in the current proposals, would offer barely any added value for consumers and merchants. In fact, the study’s authors doubt that consumers and merchants would even understand the product given its complexity, let alone actually use it. For example, the number of parties involved in payments processing would increase from the current four (payer, payee, and their respective payment service providers) to up to eight, resulting in more complicated and slower processing. The complexity of the digital euro in this scenario would be contrary to the aim of lower costs and thus greater competitiveness for Europe. The authors also believe that the technical changes to be made would pose a huge challenge for merchants and market partners as they would have no influence on whether and when they would be made. According to the authors, the intended compensation model with upper limits below market prices would squeeze out efficient European payment systems and thus weaken European sovereignty in the long term.
“The digital euro, as envisaged at present, would be more of a rival to existing cashless payment methods and less of an innovative replacement for the traditional central bank product ‘cash’, the use of which is currently declining,” says one of the study’s authors, Professor Malte Krüger from Aschaffenburg Technical University of Applied Sciences. “Many questions remain unanswered at this stage, and the relevant Eurosystem documents and the EU Commission’s regulatory proposal contradict each other on certain points. Some issues still remain, especially with regard to the compensation model, liability issues, the offline digital euro, holding limits, and the design of the digital euro card. The focus on smartphones as payment device should also be viewed critically,” continues Krüger.
A digital euro offering added value is the way to go Tanja Müller-Ziegler, member of the Board of Managing Directors of the BVR, states: “We want to see a digital euro that offers clear added value for consumers and businesses alike. However, the PaySys study reveals that the proposals put forward by the Eurosystem and the European Commission so far, which involve a state-operated parallel world alongside the existing and tried-and-tested private-sector payments processing system, are not the way to go. All ideas need to be centered around the benefits for users, including when it comes to anonymity, stability, and data protection. There remain many unanswered questions in this regard too. The design of a digital euro must take account of banking practice to a much greater extent, and we continue to offer to play an active and collaborative role in this process."
The PaySys study
The authors of the study ‘The digital euro from a consumer, retailer and industry perspective’, which was conducted by PaySys Consultancy and commissioned by the BVR, are Dr. Hugo Godschalk, Managing Director of PaySys Consultancy, Professor Malte Krüger from Aschaffenburg Technical University of Applied Sciences, and Professor Franz Seitz from Amberg-Weiden Technical University of Applied Sciences, who are experts and academics specializing in payments processing, financial markets, and monetary policy. The method used in the study was systematic desk research and involved examining documents and regulatory proposals published by the Eurosystem and European Commission up to June 2024. The documents and proposals were analyzed for consistency and with regard to the feasibility of implementation in the European financial market, particularly from the perspective of merchants and consumers.