ECB plans for a digital euro

Brendan Burgess

Brendan Burgess

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I attended an ECB webinar this morning on this topic. I knew nothing about it.

This is my understanding of how it will work in practice.
1) I download euros onto my wallet on my phone (I can do online payments as well) ( I think I get them from my own bank. Not sure though.)
2) I want to give you €20, I can transfer it from my wallet directly to your wallet - you can spend it immediately
3) I want to pay Tescos €30 , I tap just as I do with my debit card at the moment
 
I said that I rarely used cash and have a good service from AIB and Revolut, so why would I bother with this?

1) There will be no direct cost to me for paying with the Digital Euro
From the merchant's point of view, the costs should be lower than using Visa, Mastercard or PayPal. A lot of the costs of the infrastructure will be borne by the ECB just as they bear the cost of cash now.

If the costs are lower from the merchant's point of view, that is good for me.

2) It will work offline
If there is a breakdown in the internet or phone system, I can still pay with the Digital Euro.

3) Resilience
The three major payment providers are American. The Americans switched off Visa and Mastercard in Russia so they could not be used. While this is unlikely to happen in the EU, it is better than it would be under our control.

4) The same privacy as cash payments
There will be no record of the transaction.
 
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I think Ireland is unique in Europe for the level of uptake of Revolut among the population. I think we would all agree that it is pretty ubiquitous here. However I believe in other countries it is still pretty niche. This ECB solution is to bring the functionality of Revolut that we in Ireland now take for granted to the rest of Europe.

I would also assume that it is non-proprietary and it will work between banks without a common app but that is speculation on my part and wishful thinking perhaps!
 
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tallpaul said:
I would also assume that it is non-proprietary and it will work between banks without a common app but that is speculation on my part and wishful thinking perhaps!
Click to expand...
It absolutely would.

Future providers of virtual wallets are likely to be existing banks and payments firms. There would be a common protocol for peer to peer payments.
 
Download the Euro's from your bank account I presume? Would the banks charge for that, I'd have said yes since this potentially eats some of their transactional cake.

Did they give any idea on whether or not some of the benefits you have using a card such as chargebacks would be included and who is liable if your phone is stolen/wallet hacked etc.

I don't understand how it can work offline, that implies the wallet is stored on your phone or via a card (think Leapcard) so that brings risks.

There will always be a transactional record, otherwise how can the banks settle the fund exchange and how can you manage your own finances.

Interesting nevertheless.
 
It's hard to see the Central Bank/ECB being able to administer this.

People will claim that money disappeared from their account and that will need investigation.

If someone pays a scammer, will the ECB refund them as quickly as AIB does, or just refuse the way Revolut does?
 
I'd head and read about this. Isn't it a bit more like bitcoin. You can use any app, digital, anyone can use it, it's anonymous like cash. If someone scams you its gone. The only difference its more stable and won't flatulate like bitcoin as its controlled by the central bank.
 
Progress report:
www.ecb.europa.eu

Timeline and progress on a digital euro

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
www.ecb.europa.eu www.ecb.europa.eu


www.ecb.europa.eu

Progress on the preparation phase of a digital euro – Third progress report

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.
www.ecb.europa.eu www.ecb.europa.eu
 
Fortune said:
It's digital currency. They don't give you cash when it's stolen from you or you're scammed, so why would they do it for cash that's made up of ones and zeroes rather than paper?
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Agree fully.

But I think that many users will prefer the security of a debit card issued by a bank.
 
The Digital Euro will be late coming to the table, and the alternatives (revolut, contactless debit/dredit cards, Wise transfers etc) are well bedded in. Successful uptake will depend in large measure on the fee structure for commercial vendors. If this is low/minimal, there will be a huge incentive to businesses to treat it as a preferred payment method, reducing/eliminating the hefty charges associated with credit and debit cards, and if businesses can promote and incentivise the use of the Digital Euro for consumers it could lead to widespread use/uptake. Otherwise it will just be one more option in a crowded market, vying with other payment methods that already have critical mass.
 
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