Could the Digital Euro replace card networks like Mastercard and Visa?

The European Central Bank is progressing plans for the digital euro, a central bank-backed digital currency intended to complement cash and support everyday payments across the eurozone. In this article, we explore whether digital euro payments in Europe could represent a realistic challenge to Mastercard and Visa’s long-standing dominance in European payments, what would need to happen for that shift to occur, and what it could mean for businesses, consumers, and payment costs over time.

European payments today

Card networks have shaped European payments for decades, along with the transaction fees that remain a consistent friction point for businesses of all sizes. With the current industry shift to adopting account-to-account payment methods, the digital euro enters the discussion as something structurally different: a central bank-backed form of money designed to complement cash, maintain public access to central bank money in a digital economy, support a more resilient European payments infrastructure, and available free of charge for consumers.

It is not positioned as a replacement for existing systems. The more relevant question is whether it could materially reshape parts of the market that have long been defined by card-based rails.

Card payments remain the dominant non-cash payment method across Europe, particularly for ecommerce and cross-border transactions, where consistency and acceptance matter most.

For merchants, this comes at a cost. Interchange fees, scheme fees, and processing charges sit behind every transaction. Individually small, but material at scale, particularly for platforms and high-volume merchants.

At the same time, market structure matters. A small number of global card networks dominate payment acceptance across Europe, limiting the negotiating power of many businesses and contributing to a concentrated payments ecosystem.

In response, account-to-account payment methods, including open banking payments, are emerging as a viable alternative for certain use cases. By enabling direct transfers between bank accounts, these solutions bypass traditional card rails and can reduce transaction costs where customer adoption and user experience support their use.

What the Digital Euro actually is

The digital euro is a proposed central bank digital currency issued by the European Central Bank. It would represent a digital form of euro cash, designed for everyday retail payments across the eurozone and distributed through banks and payment service providers, rather than directly by the ECB.

Unlike crypto-assets, the digital euro would be central bank money. This means its value would be guaranteed by the ECB, it would maintain a stable value, and it would be redeemable at face value for euro cash. It also differs from existing digital payment methods, which rely on private money held in commercial bank accounts or processed through card networks.

The digital euro remains in the preparation phase, with no final decision yet taken on issuance. If legislation is agreed in 2026, pilot programmes could begin as early as 2027, with a potential rollout towards the end of the decade.

The ECB distinguishes between a retail and a wholesale digital euro. The retail version would be used for everyday payments between consumers, businesses, and public entities. The wholesale version would be designed for settlement between financial institutions and within capital markets infrastructure.

If introduced, the digital euro would have legal tender status, meaning it would generally be accepted as a means of payment wherever euro cash is accepted, subject to specific safeguards and exemptions set out in legislation. It would sit alongside cash and existing payment methods, rather than replace them.

How card networks currently work and why costs matter

Card networks such as Visa and Mastercard have dominated European electronic payments for decades. According to the European Central Bank, card payments remain the most widely used non-cash payment method across the European Union.

For businesses, accepting card payments involves several costs, including interchange fees, scheme fees, and processing charges. While these fees are often charged on a per-transaction basis, they can add up significantly at scale, particularly for e-commerce businesses, platforms, and merchants with high transaction volumes.

Businesses also have limited negotiating power due to the scale and reach of the major card schemes. Their established infrastructure, widespread consumer adoption, and deep banking relationships make them difficult to replace.

At the same time, open banking payments are beginning to offer an alternative in some use cases, enabling account-to-account payments that can reduce reliance on traditional card rails and lower transaction costs for businesses.

The case for disruption

The digital euro could introduce real pressure into parts of the existing payment model, but only under specific conditions.

A key factor is cost. The European Commission has indicated that basic digital euro payments would be free for users, positioning it closer to public money infrastructure than a commercial payment rail.

Another factor is settlement risk. As central bank money, the digital euro could reduce dependence on private intermediaries for core payment finality, reshaping how trust is structured in parts of the system.

There is also a broader shift already underway across Europe towards alternative payment rails. Account-to-account payment models continue to grow, while regional initiatives such as Wero and Bizum have demonstrated that large-scale adoption outside traditional card networks is possible in specific markets. Wero had reportedly reached more than 43 million users and over 100 million transactions by early 2026, while Bizum now processes over one billion transactions annually in Spain.

Open banking adoption is also continuing to expand across Europe, reflecting growing demand for lower-cost and more flexible payment models.

Alongside this, EU institutions have consistently highlighted the importance of reducing reliance on non-European payment infrastructure, particularly international card schemes such as Visa and Mastercard, which continue to play a dominant role in European payments.

Taken together, this creates a credible case for disruption in selected payment flows, particularly where cost, routing, and settlement efficiency matter most.

Why it’s harder than it looks

While the digital euro has strong potential, structural replacement is another story.

Consumer behaviour is deeply ingrained. Cards are embedded in everyday payment flows, particularly online, where speed, familiarity, and trust drive adoption. Research shows people are significantly more likely to spend when using cards compared with cash, reinforcing how entrenched card-based behaviour has become.

On the merchant side, card acceptance is built into a layered ecosystem of schemes, acquirers, processors, and gateways that underpins every transaction. This structure is a key reason cards remain the default payment method across the euro area, particularly for e-commerce and cross-border payments, where consistency and reliability are critical. The ECB identifies this reliance on card infrastructure as a defining feature of today’s retail payments market in Europe.

There is also a reality check on what a digital euro would replace in practice. Even where new public infrastructure is introduced, it typically operates alongside existing payment rails rather than displacing them entirely. In practice, this can strengthen the resilience and flexibility of the wider payments ecosystem, while reflecting the depth of integration already built around card schemes.

And finally, timing matters. Even in the best case, a digital euro would take years to reach meaningful scale. That gives payment providers, card networks, marketplaces, acquirers, and fintechs time to assess how digital euro payments could fit into existing models and where they may create new opportunities or efficiencies across the ecosystem.

What would actually need to happen

For the digital euro to challenge established card networks, several structural conditions would need to align.

Merchant acceptance would likely need legal backing

The European Commission’s proposal includes legal tender status and acceptance requirements in defined contexts to avoid fragmentation across the euro area. Without this, adoption would risk being uneven across Member States.

The consumer proposition would need to go beyond cost savings for merchants

ECB design work is clear that the digital euro must deliver tangible value for users in everyday payments, not just replicate existing options.

At the same time, the growth of account-to-account payment models such as open banking payments, Wero, Bizum, and Blik suggests there is already consumer appetite for alternatives to traditional card payments, particularly as these models expand further into e-commerce and point-of-sale use cases.

Integration with existing infrastructure is key

The Commission has set out that the digital euro would be distributed through banks and payment service providers, pointing to a model that sits within existing payment rails rather than replacing them.

Standardised interfaces and API access

The ECB has highlighted the importance of standardised technical interfaces to support interoperability and innovation, including potential API-based access for payment providers and fintechs depending on the final design.

Disruption is possible, replacement is not

The digital euro represents a genuine long-term shift in European payments and could place pressure on existing card fee structures over time, particularly in use cases where cost efficiency and routing flexibility matter most.

However, replacing established players such as Visa and Mastercard is a different question. Their scale, infrastructure, and role in global commerce make full displacement unlikely in the foreseeable future.

The more likely outcome is a multi-rail payments environment, where businesses route transactions based on cost, context, and acceptance. In practice, this could include cards, account-to-account payments via open banking, and potentially digital euro payments as the ecosystem develops across Europe.

For platforms and financial services teams, the focus should be on flexibility. Payment infrastructure will need to support multiple payment methods side by side, including integration with open banking payment gateways, to adapt as regulation, user behaviour, and payment models continue to evolve.

What this means for platforms and finance teams today

Regardless of how the digital euro develops, the direction of European payments is moving towards more rails, more flexibility, and greater interoperability. In that environment, open, API-driven payment infrastructure becomes increasingly important.

As digital euro payments evolve alongside cards and account-to-account payments, businesses will need the ability to route payments based on cost, context, and acceptance. Infrastructure that can support multiple payment methods will be better positioned as the market continues to change.

The legislative process is also progressing. The European Parliament has backed a framework for a digital euro supporting both online and offline payments, while ECB timelines continue to point towards potential issuance later in the decade, subject to development and legislative progress.

The ECB has also positioned the digital euro as part of a broader effort to strengthen European monetary sovereignty and reduce reliance on non-European payment infrastructure.

For platforms and finance teams, the payment infrastructure decisions made today are likely to have a significant impact over the next three to five years.

Talk to Fire about building payment infrastructure that is ready for a multi-rail future in European payments.

–

FAQs

What is the digital euro and who is developing it?

A proposed central bank digital currency issued by the European Central Bank for everyday payments in the euro area.

Is the digital euro the same as cryptocurrency?

No. It would be central bank money issued and backed by the ECB, meaning its value is stable and always redeemable at par. This differs from crypto-assets, which are privately issued and can fluctuate in value.

How do Mastercard and Visa make money from European payments?

Through scheme fees, processing fees, and transaction-related charges across the card network.

Could the digital euro reduce payment costs for businesses?

Potentially, depending on final design and adoption.

When will the digital euro be available?

No confirmed date. Likely later in the decade if legislation and preparation progress.

What is the difference between the digital euro and open banking payments?

The digital euro is central bank money; open banking enables account-to-account payments via banks.

How should businesses be thinking about the digital euro now?

As a long-term shift, not a replacement. Focus is on flexible, multi-rail payment infrastructure.