ECB to Begin Selecting Payment Service Providers for Digital Euro Pilot
European Central Bank eyes a 12‑month trial in late 2027 after announcing a formal PSP selection process that will start in early 2026.
BRUSSELS – The European Central Bank (ECB) moved a step closer to the rollout of a central‑bank digital currency (CBDC) by unveiling a timeline for the recruitment of payment service providers (PSPs) that will take part in the upcoming digital euro pilot. Executive Board member Piero Cipollone told an executive committee of the Italian Banking Association that the ECB will open the selection window in the first quarter of 2026, with a limited set of PSPs, merchants and Eurosystem staff slated to test the solution over a twelve‑month period beginning in the second half of 2027.
How the pilot will be shaped
- Limited scope: Only a small, vetted group of EU‑licensed PSPs will be invited to join the trial, giving them early exposure to the digital euro’s operational environment.
- Core role for banks: The design is intended to keep banks at the centre of the payments ecosystem, protecting existing European card schemes such as Italy’s Bancomat and Spain’s Bizum.
- Direct Eurosystem support: Participants will receive technical assistance from the Eurosystem and will be able to feed practical feedback into the final architecture of the digital euro.
Cipollone emphasized that the digital euro is being built to coexist with, rather than replace, domestic payment schemes. He highlighted that merchant fees on the digital euro network are expected to be set lower than those charged by global card operators (Visa, Mastercard) but higher than the rates of purely domestic schemes, striking a balance that preserves competitiveness for local players.
Why the selection matters for the fintech community
The early‑access phase offers PSPs a “readiness advantage.” By handling onboarding, settlement and liquidity‑management processes before any broader rollout, firms can:
- Validate technology stacks against ECB‑defined standards.
- Map out compliance and staffing costs with greater certainty, enabling more accurate budgeting for future investments.
- Influence design choices through direct interaction with the Eurosystem, potentially shaping the digital euro’s long‑term governance model.
Analysts note that the move also serves as a defensive measure against private‑sector alternatives, including stablecoins and other non‑bank payment solutions that have been eroding the traditional banking role in payments across Europe.
Context and timeline
- October 2025: The ECB announced that the project had entered its next phase, targeting a full launch in 2029 if legislative steps are completed on schedule.
- 2026: Legislation is expected to be finalized, clearing the way for the pilot to commence.
- Late 2027 – 2028: The 12‑month test will run, after which the ECB will assess results before deciding on a wider deployment.
Key takeaways
- Selection starts Q1 2026: A small cohort of EU‑licensed PSPs will be invited to join the digital euro pilot.
- Banks stay central: The design safeguards existing European card networks and keeps banks at the heart of the payments infrastructure.
- Early‑readiness edge: Participants gain hands‑on experience and a voice in shaping the CBDC’s final form.
- Strategic defense: The digital euro aims to counterbalance the rise of stablecoins and other private payment solutions that could marginalise European banks.
- Road‑map to 2029: A successful pilot could accelerate the timeline toward a continent‑wide digital euro launch.
The ECB has not responded to requests for comment on the specifics of the PSP selection process. The announcement marks a pivotal milestone for Europe’s CBDC ambitions, signaling that the digital euro is moving from concept to concrete testing within the next few years.
Source: https://cointelegraph.com/news/ecb-digital-euro-pilot-2027-psp-selection-2026-cipollone?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
