On paper, Europe still looks like a cash continent. In 2024, cash was used for 52% of point-of-sale transactions (down from 59% in 2022). But the direction of travel is clear: online payments rose to 21% of day-to-day payments by number and 36% by value (up from 17% and 28% in 2022). Europe’s payments habits are becoming more digital — and more dependent on whoever runs the pipes.
That is why the European Parliament’s latest nod to a digital euro that works both online and offline matters. On February 10, 2026, lawmakers approved amendments to a resolution on the ECB’s 2025 annual report backing a dual-mode digital euro — a shift away from earlier “offline-only” thinking and closer to what the ECB and EU governments want.
This is not the final law. The annual-report vote has no direct legislative effect, as even supporters acknowledge. But politics is often about signalling before it is about statutes. The vote gives the ECB something it has lacked: a visible parliamentary majority in favour of the broader project, not a watered-down version that cannot compete with card networks.
The real issue is not “cash versus cards”. It is “Europe versus dependency”.
The ECB has been unusually blunt about the scale of Europe’s reliance on non-European providers. In a February 6 speech, ECB executive board member Piero Cipollone said almost two-thirds of card-based transactions in the euro area are carried out by non-European companies, and that in 13 euro-area countries, in-store payments depend entirely on international card schemes.
Those are not abstract shares. They sit on top of a huge base. In the first half of 2025, the euro area recorded 44.0 billion card payments worth €1.7 trillion. Contactless accounted for 29.6 billion of those payments, worth €0.8 trillion.
If you want a quick test of whether payments count as “critical infrastructure”, imagine a day when that volume cannot clear.
What the digital euro is — and what it is trying to be
The easiest way to describe the digital euro is: cash, rebuilt for a world that pays with phones.
The ECB’s pitch is practical, not utopian: the digital euro would be widely accepted, free of charge for basic use, and usable anytime and anywhere in the euro area. It would work online and offline.
The EU’s legal architecture is designed to make “widely accepted” mean something concrete. The Commission’s draft regulation gives the digital euro legal tender status, which generally implies it cannot be refused for settling a debt in euro — while still allowing some exceptions.
There is also a deliberate design choice in what the digital euro is not. The ECB says it would run on a centralised settlement platform rather than a public blockchain.
Offline is not a “feature”. It is the political deal.
The Parliament’s shift toward “online and offline” looks technical. It is actually political.
Offline capability is the bridge between two European instincts:
- Resilience (what happens when networks fail), and
- Privacy (how to keep a digital tool from feeling like surveillance).
Cipollone argues the offline option should allow payments even when there is no electricity and no internet connection — the kind of line that only sounds dramatic until you have lived through outages.
In the ECB’s own framing, offline payments also enable cash-like privacy: for offline transactions, personal transaction details would be known only to the payer and the payee.
The Commission proposal goes further in plain language: for offline digital euro payments, “no transaction data monitoring should occur” — while also acknowledging that offline payments will still need specific holding and transaction limits to manage AML/CFT risks.
Offline, in other words, is where Europe tries to make digital money feel like public cash — not like a corporate wallet.
Online mode is where the trust problem lives
The hardest debate is not whether offline should exist. It is whether the online version can be trusted at scale.
Here the ECB keeps repeating a simple claim: it does not want your data.
In the February 6 speech, Cipollone said that for online payments the ECB and national central banks would not be able to identify the payer or payee, seeing only encrypted codes and the transaction amount. The link between the codes and real identities would stay with users’ banks.
In his February 8 interview, he made the same point more directly: for the online solution, “the ECB will not have people’s data”, and will not know who is paying whom.
That is the promise. The political risk is obvious: if citizens do not believe it, adoption will stall — and critics will frame the project as a state wallet, not a public option.
A quiet but important design choice: the “waterfall” wallet
One reason holding limits do not automatically ruin the user experience is a funding mechanism that sounds mundane but matters a lot.
Cipollone describes a “waterfall” approach: when you pay with digital euro online, money can be downloaded from your bank account into the digital euro wallet and paid out, meaning you do not necessarily need to “prefund” the wallet for everyday use. (Offline, you would need funds stored on the device.)
The ECB’s own preparation-phase report also points to this linkage: users would be able to link a wallet to a commercial bank account so payments can be made without needing to pre-load funds, and even receive payments that exceed a holding limit through the wallet set-up.
This is the kind of plumbing decision that determines whether the digital euro is “another app” or something that fades into the background — which is what payments technology is supposed to do.
Banks’ big fear: deposits fleeing into central bank money
If Europe is building “digital cash”, it must also stop people from treating it like a high-trust savings account.
The ECB’s answer is blunt: no interest, plus holding limits.
Cipollone says digital euro holdings would not be remunerated and would face holding limits, explicitly to avoid excessive deposit outflows.
The Commission’s draft regulation also states, plainly, that the digital euro shall not bear interest.
And in the February 8 interview, Cipollone adds another demand-control lever: only individuals would “have the digital euro, not merchants.” Merchants could accept it, but not hold it as a store of value.
Critics still worry that “in a crisis” people will move money into the safest thing available. The ECB’s own technical work tries to defuse that.
In its closing report on the preparation phase, the ECB says it ran a technical analysis — at the request of co-legislators — testing hypothetical holding limits from €500 to €3,000 under both a business-as-usual scenario and an extremely conservative “flight-to-safety” scenario. It says the results suggested impacts would be manageable and not a threat to financial stability — and stresses that this exercise is not the ECB’s final position on what the limit should be.
One detail is telling. With a €3,000 limit, the ECB says only 13 banks (0.3% of banking sector assets) would reach the 100% liquidity coverage ratio level, and only nine (0.1% of assets) would be at risk of dipping below the 100% LCR threshold due to depleted buffers.
These are technical claims, not a guarantee. But they explain why policymakers keep returning to a “few thousand euros” range: it is an attempt to keep the digital euro useful for payments while limiting its attractiveness as a refuge.
The economics: can digital public money be cheaper — without killing incentives?
Europe’s payments debate is also a fight about fees.
Cipollone argues that accepting card payments is “expensive”, especially for small merchants, estimating it can cost three to four times as much for small businesses as for larger merchants. He says the digital euro would lower costs because the ECB would not charge scheme fees.
EU governments have built fee policy into their negotiating stance. In December 2025, Reuters reported that the Council position would require basic services to be free, allow fees for value-added features, and impose a transition period of at least five years that caps interchange and merchant fees in line with existing payment methods.
The Commission’s draft regulation tries to formalise that logic: merchant service charges or inter-PSP fees should not exceed the lower of (i) relevant costs plus a reasonable profit margin, and (ii) fees for comparable means of payment.
The missing piece is incentives. Banks and payment firms will have to build and run the front end. The ECB’s FAQ points to a “compensation model” meant to give PSPs incentives comparable to other digital payment methods — an attempt to avoid turning the digital euro into an unfunded mandate.
The timeline risk: 2029 is not far away in politics, but it is long in fintech
The digital euro will not exist until Europe passes the law. Cipollone keeps stressing the point: no legislation, no issuance.
The ECB’s preparation-phase closing report says it aims to be ready for a potential first issuance in 2029, assuming co-legislators adopt the regulation during 2026, with pilot activity potentially starting as soon as mid-2027.
Reuters reporting from October 2025 also cited a mid-2027 pilot ambition and a 2029 readiness goal, while noting the ECB’s estimate that industry costs could run €4 billion to €5.77 billion after savings and synergies.
There is a strategic tension here. The ECB explicitly worries that fast-growing US dollar-denominated stablecoins could push the euro into a weaker position in digital finance if Europe does not move.
In fintech time, “late” does not always mean “irrelevant”. But it does mean the digital euro will be judged against a moving benchmark: instant payments, wallets, embedded finance, and whatever comes next.
What Parliament’s vote really changes
The most important thing Parliament did this week was to reduce the odds that the digital euro becomes a purely symbolic “offline gadget” — a compromise that preserves privacy but abandons competitiveness.
Euronews reports that the rapporteur on the legislative file had argued for an offline-only scope, precisely because an online version would directly challenge Visa and Mastercard. It also notes that the annual-report amendment vote is a way to demonstrate where political support sits amid deadlock.
Reuters, meanwhile, describes the February 10 vote as Parliament’s “first major backing” and a shift toward closer alignment with the ECB’s sovereignty argument.
The remaining question is the one Europe always struggles with: can it turn an industrial policy instinct into a product people actually use?
What to watch next
- Parliament’s formal position on the regulation (beyond symbolic votes).
- The holding limit: not the number itself, but the credibility of the process for setting and changing it.
- Merchant acceptance rules and exemptions (microenterprises, non-profits, temporary outages).
- Fee caps and incentives: will costs fall without strangling PSP business models?
- Offline UX: if it is clunky, privacy will not save it.
- Timing: whether 2026 legislation stays on track for a 2027 pilot and 2029 readiness.
