The European Central Bank has selected 36 payment service providers to participate in the next pilot phase of the digital euro, moving the central bank digital currency (CBDC) project closer to real-world testing. Scheduled to begin in the second half of 2027, the 12-month pilot will evaluate the digital euro’s payment infrastructure, merchant acceptance, wallet functionality and fraud controls in a controlled environment. The milestone demonstrates that the ECB is shifting its focus from policy design to operational readiness, with banks and payment providers playing a central role in shaping how a future digital euro could function across the Eurozone.
The European Central Bank (ECB) has finalised the selection of 36 payment service providers (PSPs) from across the Eurozone to participate in its upcoming digital euro pilot exercise. Marking a critical operational milestone in Europe’s central bank digital currency (CBDC) initiative, the highly structured trial is scheduled to launch in the second half of 2027 and run for a 12-month period. The cohort of participants was finalised following an official call for expressions of interest initiated in March 2026, which attracted over 50 competitive applications from commercial banks and non-bank payment institutions.
The upcoming pilot phase is engineered to stress-test the digital currency’s technical functionality, backend clearing processes, and consumer-facing design under realistic economic conditions. By assembling a diverse test group of commercial banks and agile non-bank financial intermediaries of varying sizes, the Eurosystem aims to establish a representative, real-world testing environment. Rather than distributing a live digital currency immediately to the public, the 12-month trial will rely on a restricted beta software version of the digital euro. This software layer will functionally mirror the parameters detailed in draft EU legislation, though it will not hold formal legal tender status during the testing window.
Under the approved testing framework, selected PSPs will assume specialised operational roles to evaluate the two-sided payment network. Distributing PSPs will be responsible for onboarding central bank staff, generating beta digital euro accounts, and facilitating everyday wallet transactions. Concurrently, acquiring PSPs will focus on the merchant side, integrating digital euro acceptance across participating physical points of sale and digital e-commerce checkouts. This dual structure ensures that both sides of the retail transaction loop are comprehensively tested.
The physical boundaries of the trial will span the ECB and 19 participating national central banks across Europe, including major economies such as Germany, France, Italy, and Spain, alongside regional members like Estonia, Ireland, Croatia, and Cyprus. During the active testing window, participating central bank staff and selected retail merchants will execute peer-to-peer (P2P) online and offline transfers, alongside consumer-to-business (C2B) payments at physical cash registers and online storefronts. This high-frequency volume is intended to refine the digital currency’s offline capabilities, evaluate dispute resolution channels, and optimise fraud-detection protocols before final legislative decisions on full-scale public issuance are made.
Piero Cipollone, ECB Executive Board Member and Chair of the High-Level Task Force on a digital euro, stated that the strong market response to the selection call demonstrates the private sector’s readiness to actively contribute to a secure, efficient, and inclusive domestic payments landscape. Cipollone emphasised that the project relies on deep cooperation with European payment service providers to strengthen Europe’s payments infrastructure while preserving the vital role of traditional financial intermediaries. As the next immediate step, the 36 selected PSPs will begin aligning their internal core ledger systems with the digital euro’s newly updated scheme rulebook to prepare for technical testing ahead of the late-2027 deployment.
What it means for the industry
- The ECB is entering a more practical phase of CBDC development, focusing on real-world testing rather than policy discussions alone.
- Commercial banks and payment service providers will play a critical role in integrating digital euro infrastructure into existing retail payment ecosystems.
- The pilot will test key capabilities such as offline payments, merchant acceptance and fraud detection before any decision on a public rollout.
- Collaboration between central banks and private-sector payment providers highlights a hybrid model where financial institutions remain central to digital currency distribution.
- The outcome of the pilot could influence future CBDC initiatives globally as central banks closely monitor Europe’s approach to digital retail payments.
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