Fire explores what the digital euro means for payments, innovation, and business banking

Understanding the digital euro and its impact

With the European Central Bank’s (ECB) Governing Council now moving the digital euro project into the technical phase, the transition from early planning to practical development is becoming clearer. As payment behaviour evolves and cash transactions continue to decline, the need for a public digital means of payment, designed to complement cash, has become increasingly urgent.

At Fire, we welcome innovation in payments, but not all digital money is created equal. The introduction of a digital euro represents more than a technological upgrade. As cash usage declines, not having a digital form of public money could pose risks to Europe’s strategic autonomy. A digital euro is being considered to ensure that public money remains accessible and relevant, providing a reliable, euro-denominated payment option for the future.

Its design will also determine how it fits into the existing financial ecosystem. A well-structured digital euro could enable new business models, streamline payments, and expand access, while careful regulation will be essential to avoid disrupting private-sector solutions that are already working effectively.

According to the ECB, the digital euro could reduce business-to-business (B2B) costs, standardise B2B payments, and enable conditional payments such as automatic payment calculations, streamlined refunds or delayed fund settlements through new APIs. The project requires thoughtful design to ensure it does not compromise financial stability.

Looking ahead, Fire is assessing how this development could influence the payments landscape, enhance business banking, and integrate with the trusted infrastructure that companies rely on.

The promise of a digital euro

The digital euro is a proposed digital form of central bank money that would be available to both European citizens and businesses. It would be issued directly by the ECB and is designed to modernise our banknotes and prepare for the issuance of digital cash.

For businesses, the digital euro could bring several practical benefits once introduced. Payments could settle instantly, reducing delays and lowering friction in cross-border transactions. Because it would be backed by the ECB, it is expected to offer enhanced trust and security.

It could also support innovation in programmable payments, smart contracts, and wider fintech infrastructure. For example, a business could eventually pay a supplier in seconds without relying on intermediaries or incurring high fees. Conditional payments could automatically release funds once agreed conditions are met, helping streamline processes such as refunds or milestone payments.

By combining the stability of central bank banknotes with modern digital capabilities, the digital euro has the potential to make payments faster, more transparent, and more efficient for both businesses and consumers.

Key considerations

While the digital euro could bring significant benefits, there are several important risks and trade‑offs to consider:

• Impact on bank deposits – Research from the European Banking Federation indicates that a sudden shift of deposits into digital euro accounts could put pressure on banks, especially smaller ones.
• Financial stability – In times of uncertainty, customers may favour a central bank–backed digital euro, which could lead to deposit outflows from commercial banks.
• Privacy and data protection – The ECB is exploring ways to maintain user privacy, including pseudonymised transaction data and offline payment options. Careful design will be key to balancing oversight and user confidentiality.
• Cyber risk and technical reliability – A survey by the Irish Compliance Institute found that over 70% of compliance professionals are concerned about vulnerabilities to technical glitches and cyberattacks.
• Integration challenges – Introducing a digital euro will require coordination with existing financial infrastructure. Companies like Fire will need to assess how to integrate the new digital currency alongside their current systems.
• Consumer awareness – 44% of Irish retailers are not yet familiar with the concept of a digital euro, while many consumers mistakenly believe it to be a form of cryptocurrency.

The digital euro represents an important development for European payments, but its impact will depend on careful implementation. Close collaboration with banks and regulated payment service providers, clear and consistent regulation, robust data protection measures, and active engagement with businesses will all be crucial to ensuring it complements and strengthens Europe’s fintech ecosystem.

Where Fire stands

At Fire, we support initiatives that make payments faster, safer, and more transparent. We see the digital euro as a positive development, but it should complement, not replace, the systems already supporting innovation across Europe’s payments ecosystem.

As a regulated payment institution, Fire bridges digital and traditional money flows. Through our services, including open banking payments, multi‑currency accounts, and integrated payment solutions, we help businesses connect with banks and fintech infrastructure efficiently.

The broader future

Looking ahead, the evolution of digital money will extend far beyond the digital euro. Innovations in programmable finance and interoperable payment systems are already beginning to reshape how businesses manage liquidity and payments.

The design of this next layer of digital money will be critical. Thoughtful planning, close collaboration between central banks and private payment providers, and a clear regulatory framework will determine whether these new forms of digital currency enhance business efficiency while preserving financial stability.

At Fire, we see this as an opportunity for payments to become faster, more transparent, and more flexible, without compromising the trusted infrastructure businesses rely on. What matters now is not whether the bridge between innovation and trust exists, but how Europe chooses to build it.