Spanish banks road test ‘digital euro’ on existing payment infrastructures

Kicked off in November 2022, up to 30 banks, working in concert with infrastructure providers Bizum, Iberpay and Redsys, ran a PoC with the aim of undertaking an in-depth analysis of the technical, operational and business implications of the digital euro and its co-existance with existing payment instruments.

The tests encompassed various use cases for digital euro payments, including person-to-person transactions and payments in both online and physical commerce.

The consortium say the results point the way to a digital euro design that would leverage existing payment rails and value-added services, such as the Spanish instant payment platform Bizum.

“In particular, Bizum would be prepared to interconnect with other potential European services. Its existing mechanisms for user registration, portability processes between different financial entities, authentication, transaction processing, fraud prevention and management, along with other available services or standards (eg instant payments), could be leveraged to ensure the same level of guarantees, security, and privacy offered by current payment methods in a future digital euro,” states the consortium. “Additionally, this approach could help reduce the significant effort required for deploying an entirely new infrastructure and the adaptations to be performed by market participants.”

The interconnection of faster payment services across Europe has been a long-term goal of the European Central Bank, which is expected to conclude its research into the implementation of a digital euro later this month.

Another advantage would come in facilitating the adoption and understanding of the digital euro by consumers and businesses, since the new digital currency would be integrated into a fast and secure user experience that is already known and used by over half of the Spanish population.

“In this regard, the PoC has highlighted the importance of defining an equally simple user experience for offline payments, which would be the main differentiating factor of the digital euro compared to existing solutions.”