A new era for the EuroJune 28, 2023
In recent years, the European payment system has been on a journey of rapid transformation. The emergence and evolution of Europe’s digital economy has been accelerated by payments, as consumers benefit from the speed and convenience of using contactless or shopping online.
Today, we recognise the latest step in Europe’s digital journey. The European Commission has published its legislative proposal for the digital euro and introduced its vision for a new era of payments across the region. We believe this is an important initiative that strengthens Europe’s position as a leader in global innovation, and one that we’re proud to have contributed to so far.
What comes next will be critical to how successful the digital euro can be. While we commend the ambition of the Commission’s legislation, there is significant work to be done to outline how it will be integrated into Europe’s existing ecosystem. While the Euro will not be introduced immediately – by the EU’s own account, this is unlikely to happen for another 3 years - its role as a new version of cash is evident. As a new retail payment system, however, the problem it’s trying to solve remains to be determined.
We have operated multiple secure, safe, scalable payment networks around the world for decades, and are committed to bringing that same trusted experience to emerging blockchain networks and digital currencies.
What must come next
As such, we’ve collated some critical considerations for the next phase of the digital euro’s design and formation. Firstly, the digital euro will only be successful if it is integrated into the existing payment ecosystem. It should be able to interoperate with a variety of existing payment rails – including international card networks – to ensure its availability and distribution is catered to the needs of businesses and consumers. This will breed healthy competition and enrich choice for the end user.
These benefits will only be realised, however, if the end user understands the reason for the digital euro’s existence. Businesses and consumers have just experienced a fast-scale transformation from cash to digital payment methods and are now accustomed to using efficient, trusted systems that enable them to make payments on their terms. They would be forgiven for asking what the digital euro will offer that they don’t already have.
In fact, public discourse around the digital euro has so far focused on what it might hinder, rather than the value it will give. Consumers have already expressed privacy concerns about the digital euro and whether it will act as a keyhole to look into their spending habits. As such, the Commission should seek to provide comprehensive reassurance about the privacy and security measures within the fabric of the currency. These are fundamentals of every new payment method, and this is no different.
Finally, it must be fair. For its rightful integration into Europe’s payment ecosystem, the digital euro must be self-sustaining and cannot assume a privileged position. Any sign of regulatory influence or public subsidies in investment or operational costs will significantly undermine its credibility and create an uneven playing field with existing payment methods. Instead, we would encourage the European Central Bank (ECB) to allow the private sector – via multiple payment operators – to provide overlays to the digital euro and contribute to its innovation.
At Mastercard, we have – and will continue to be – a trusted collaborative partner to the EU in the development of the digital euro. With over half a century of payment experience, we have actively contributed to consultations of the ECB and supported discussions with national central banks and other European institutions. We will always be available to play a role where we can add value. We stand ready to assist our customers and all players in the ecosystem once they look at integrating the digital euro into their overall payments offering.
Ultimately, we support European digitalisation and will do all we can to support the evolution of the digital economy. We recognise the digital euro as an initiative with the potential to accelerate this journey forward – and position Europe as a global leader in digital currencies – but strongly advise the EU’s institutions to work collaboratively with the private sector to ensure its reality is fair, safe, and justified.
About Mastercard (NYSE: MA)
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.