// analysis
Digital euro, 5/6: the price of sovereignty
The ECB has priced its infrastructure, banks have priced their transformation, and merchants still do not know the final price of each payment. Our investigation reconstructs a bill no institution publishes in full.
This is the fifth part of our six-part investigation into the digital euro. The first article followed the nature of the money, the second tested banking stress, the third mapped data flows and the fourth traced the legal boundary around programmability. This time we follow the bill. It starts on the Eurosystem balance sheet, moves through bank technology, reaches merchant terminals and ends in a fee model that is still unfinished.
Four numbers dominate the debate: €1.3 billion, €320 million a year, €5.77 billion and €18 billion.
They cover different perimeters and can therefore all be correct even though none represents the total cost of the digital euro.
The first covers Eurosystem development up to a potential first issuance. The second projects annual central operating costs. The third is the ECB estimate of bank investment after strong mutualisation. The fourth comes from a PwC study commissioned by banking associations, using a broader banking universe and different assumptions about the systems that must change.
Adding them would manufacture false precision. Presenting them as the lower and upper ends of one range would make the same mistake.
The bill depends on what is ultimately built: a genuinely reusable common infrastructure, or another layer added on top of cards, instant payments and Wero.
Status as of 14 August 2026. The final regulation has not been adopted. The merchant fee caps, offline compensation, the remuneration of the distributing PSP and the treatment of a third-party funding bank remain under negotiation. The simulator below therefore forecasts neither adoption nor final fees. It exposes the economic transfers generated by adjustable assumptions.
Test the bill before reading
L0G SIMULATOR
Who pays the bill?
Move the assumptions to track merchant savings, PSP compensation and the public cost per transaction.
Statistical baseEuro area 2025: 91.7bn card payments, worth €3.531tn.
Scenario results
Merchants
- Current card cost
- €1.77bn
- New merchant charge
- €953.29m
- Annual savings
- €812.07m
Private chain
- MSC collected
- €953.29m
- Distributing PSP
- €571.98m
- Acquirer remainder
- €381.32m
Online MSC allocation
Public layer
- OPEX per transaction
- 3.49 ¢
- OPEX + amortised development
- 4.91 ¢
The individual cap applies: the online MSC is reduced to this merchant’s existing card fee.
Economic inconsistency: inter-PSP revenue exceeds the MSC collected. The acquirer’s gross remainder is negative.
A fixed fee follows the number of payments, whereas a rate follows their value. At the same average ticket, the two units can produce very different allocations.
The offline share is free at the point of payment, so its cost must be funded elsewhere in the chain.
Scenario recalculated
Formulas and scope
Observed data
The base adds both ECB 2025 half-years: €3,530,718,386,134.85 and 91,708,654,727 card payments sent in the euro area. The ECB API still marks the second half as provisional.
Adjustable assumptions
- Share of card payments migrated
- Adoption: the same share of card-payment value and count migrates to the digital euro, keeping the implied average ticket constant.
- Current card merchant fee
- Card fee: an illustrative merchant counterfactual. Presets are neither official averages nor recommendations.
- Proposed digital euro MSC
- MSC: assumed online merchant charge. Its final level is unknown.
- Inter-PSP
- Inter-PSP: internal allocation between acquirer and distributing PSP. The model separates a value-based rate from a fixed amount per transaction so the units cannot be confused.
- Fee-free offline share
- Offline: share of value and count that generates no private fee revenue in Parliament’s scenario.
- Public-cost assumptions
- Public costs: €1.3bn development and €320m a year are ECB estimates. The amortisation period remains a scenario convention.
Calculations
- Migrated value = 2025 card value × adoption.
- Migrated transactions = 2025 card count × adoption.
- Applicable MSC = the lower of proposed MSC and card fee when individual protection is enabled.
- Digital-euro charge = migrated value × online share × applicable MSC. Savings = counterfactual card cost − digital-euro charge.
- Distributor revenue = online value × inter-PSP rate, or online transactions × fixed amount. Acquirer remainder = collected MSC − distributor revenue.
- Full public cost per transaction = (annual OPEX + development ÷ amortisation) ÷ migrated transactions.
What the model does not measure
This is neither an adoption forecast, a total social-cost estimate nor a profit-and-loss account. It excludes bank, PSP and merchant implementation costs, fraud, support, tax, discounting, P2P uses and resilience value. It allocates the entire public layer to merchant payments, a deliberately conservative convention.
The default scenario takes 10% of euro-area card payments in 2025, an illustrative current card fee of 0.50%, a digital euro online MSC of 0.30%, a 0.18% ad valorem inter-PSP equivalent, and a 10% fee-free offline share. None of these inputs has been decided or forecast. They are there to answer a simple question: when one rate changes, who gains, who loses, and how much volume is needed to spread the fixed cost?
Sensitivity is the most useful result. Public cost per transaction falls as adoption rises. Merchant savings disappear as the MSC approaches the card price. The acquirer remainder turns negative if the inter-PSP fee exceeds the fee it collects. The no worse-off principle protects large merchants that already negotiate below the market average.
The economic model lives inside those gaps.
The five layers of the bill
The project has at least five economic layers.
The first belongs to the Eurosystem: development, settlement, the app, aliases, fraud, offline and central maintenance.
The second belongs to distributing banks: KYC, accounts, apps, core banking, fraud, disputes, accounting and customer service.
The third belongs to non-bank PSPs, for which no consolidated public estimate exists.
The fourth belongs to merchants and acquirers: terminals, checkout software, e-commerce, certification, support and per-transaction fees.
The fifth is collective. A cost funded through seigniorage may not appear as a direct budget line, but it still uses or reduces central-bank income.
A true total cost of ownership would have to follow every layer over several years and include:
- initial investment;
- operations;
- upgrades;
- security;
- hardware;
- vendors;
- support;
- fraud;
- disputes;
- reversibility;
- opportunity costs;
- compensation revenue.
No public document does this.
The ECB publishes its own layer and one estimate of bank investment. PwC prices bank transformation. The European Court of Auditors documents opacity in the card market. De Nederlandsche Bank surveys merchants. EPI publishes Wero milestones.
Together these pieces reveal the mechanism.
They do not yet form a complete ledger.
€1.3 billion for the public layer
The ECB estimates that Eurosystem development will cost about €1.3 billion up to a potential first issuance.
The amount is meant to cover central components developed by national central banks and external suppliers, including:
- the app and SDK;
- the offline solution;
- risk and fraud management;
- alias lookup;
- SEPI;
- settlement;
- the rulebook;
- tests;
- operational preparation.
From 2029 the ECB projects about €320 million a year in operations.
The date serves only as a planning horizon.
On a simple nominal basis:
- development plus five years of operation equals €2.9 billion;
- development plus ten years equals €4.5 billion.
These are l0g scenarios. They do not adjust for inflation, discounting, ramp-up or further investment.
They place the €1.3 billion within the system’s full life, whose public bill would be higher.
How seigniorage carries the public cost
The ECB says the Eurosystem will absorb the expense as it absorbs the cost of banknotes, through seigniorage.
The term can sound like free money.
The mechanism is more concrete.
Money issued by the central bank is a liability. The assets held against that liability can generate income. Under the current texts, digital euro holdings would not bear interest, while the corresponding assets may earn it.
The expense is therefore charged against monetary income.
Three outcomes are possible.
Additional monetary income covers the project. The digital euro expands the income-generating balance sheet enough to offset the cost.
Digital money replaces banknotes. The monetary income changes little, but the cost structure changes.
The project reduces net profit. National central banks receive less distributable profit or build smaller reserves, which can ultimately affect public finances.
The accurate formulation is therefore:
Seigniorage avoids a Eurosystem scheme fee. It does not make the infrastructure economically free.
An ECB paper on CBDC profitability produces an average annual increase in net interest income of €1.17 billion in one central scenario. The result depends on a €125 billion stock, where the funds come from and the interest-rate assumptions.
This balance-sheet scenario does not forecast a profit for the digital euro.
It shows that the public outcome depends as much on the balance sheet as on the software budget.
The dispute over bank-cost estimates
Three banking estimates are regularly cited.
The European Commission estimated investment at €2.8 billion to €5.4 billion in 2023.
The ECB produced a €4 billion to €5.77 billion range over four years in 2025.
The PwC study, commissioned by EACB, EBF and ESBG, estimates €18 billion. An extended scenario can reach €30 billion.
These are not three measurements of the same object.
PwC starts with 19 banks or banking groups in nine markets. It maps commercial, technical and operational changes and extrapolates them to the euro area. Roughly 75% of the cost comes from technology. Respondents say the programme would consume close to 46% of their relevant skilled resources each year for four years.
Yet the €18 billion excludes:
- offline functionality;
- multiple accounts;
- merchant acquiring;
- future running costs.
The number is high and explicitly incomplete.
The ECB then starts from the same material, removes selected bundles and applies much stronger synergies.
The bridge from €124 million to €103.9 million
The ECB note lets us trace part of the calculation.
It uses about €124 million per bank as the detailed PwC bundle base, then removes four items:
| Item | ECB adjustment |
|---|---|
| Physical card | -€6.0m |
| POS terminals | -€7.0m |
| ATMs | -€5.1m |
| Fee calculation | -€2.0m |
| Total | -€20.1m |
The mechanical base falls to €103.9 million per bank before synergies.
Why remove those items?
Physical cards already exist and their issuance is often outsourced. Some POS terminals will be replaced naturally. Many ATMs already have NFC or QR readers. The DESP will calculate some fees.
The March 2026 PwC update answers each point.
The plastic is only the visible support of a card. Protocols, cryptography, certification and lifecycle management add further work.
An NFC-capable POS still needs software, checkout integration and recertification.
An ATM with a reader does not yet have the funding, defunding, security and reconciliation flows.
The DESP can calculate a fee, but the bank must still receive it, validate it, account for it and resolve discrepancies.
The two sides are not debating whether the visible hardware exists.
They are debating how many new invisible layers sit behind it.
Synergies change the universe
The ECB applies very high group synergies, sometimes between 90% and 98% for mutual networks or institutions sharing one platform.
It then adds market synergies from:
- common vendors;
- outsourcing;
- national platforms;
- digital euro as a service.
Its base scenario uses roughly 30% market synergies.
PwC says its update already incorporates average group synergies above 79%. The direct cost is concentrated on 754 retail banks, while 1,828 institutions would fully use their group platform.
The gap remains because the unit of account is different.
A legal subsidiary can be nearly free if it shares the entire group stack.
It can remain expensive if its core banking, procedures, national market or vendors differ.
Outsourcing makes the comparison harder.
A vendor may develop a function once. Banks then pay:
- integration;
- subscription;
- licence;
- service fees;
- support;
- margin;
- switching.
Lower CAPEX can therefore coexist with a high total cost of ownership.
Neither major estimate publishes a ten- or fifteen-year TCO including future vendor prices.
The compensation chain
The proposal tries to preserve three commitments:
- free basic services for individuals;
- sufficient PSP compensation;
- controlled merchant costs.
The Parliament compromise prevents direct or indirect fees for opening, holding, managing and using the basic account and at least one payment instrument.
Additional services can be priced separately.
The merchant chain relies on two charges.
The merchant service charge, or MSC, is paid by the merchant to the acquiring PSP.
The inter-PSP fee is paid by the acquirer to the PSP distributing the digital euro to the consumer.
The Eurosystem charges neither a scheme fee nor a settlement fee.
The scope of the eighteen-cent illustration
In one illustration, the ECB uses roughly €0.18 of inter-PSP compensation on a €100 transaction.
For that €100 basket alone, €0.18 is arithmetically equivalent to 0.18%. The equality disappears as soon as the payment value changes. The figure is therefore neither a 0.18% MSC nor proof that the final inter-PSP fee will be proportional to value.
The simulator now separates both conventions. Its published scenario uses the ad valorem equivalent to reproduce the allocation shown in this article. Fixed mode applies €0.18 to every transaction and makes the effect of the average ticket visible.
The acquirer still has to fund:
- its infrastructure;
- the merchant contract;
- support;
- fraud;
- disputes;
- certification;
- its margin.
Total MSC revenue must exceed total inter-PSP revenue if the acquirer is to cover its own cost.
The simulator shows a warning whenever the selected allocation makes the acquirer’s gross remainder negative, whether inter-PSP compensation is entered as a rate or as a fixed amount.
The alert makes the economic constraint visible.
The sixth corner
The simple model has:
- the consumer;
- the consumer PSP;
- the Eurosystem;
- the acquirer;
- the merchant.
Reverse waterfall can draw money from an account held at a different bank.
A sixth party appears: the funding bank.
It:
- holds the deposit account;
- authenticates the customer;
- supplies liquidity;
- processes part of the transfer;
- carries part of the fraud and incident risk.
The funding bank can be distinct from the wallet PSP.
Banks want explicit compensation.
Non-bank PSPs argue that such a fee would raise their costs and preserve the advantage of banks that already control deposits.
The ECB and ERPB ecosystem report acknowledges that some views are mutually incompatible.
The final model must answer a basic question:
Can a bank be assigned operational liability without receiving an identifiable share of the revenue?
Parliament’s fee architecture
The ECON compromise creates a multi-stage system.
A transitional phase
MSC and inter-PSP caps are based on comparable digital means of payment, including domestic and international debit cards.
The Commission sets and publishes the levels with technical assistance from the ECB.
The method must account for:
- observed fees over the previous twelve months;
- transaction value;
- PSP connection costs;
- the absence of Eurosystem scheme and processing fees;
- a sharing of the saving between PSPs and merchants.
An individual no worse-off rule
An average cap leaves individual merchants exposed.
A PSP cannot charge a merchant more for the digital euro than it charges that same merchant for a comparable means of payment.
This matters for:
- large merchants with low negotiated rates;
- countries with efficient domestic schemes;
- contracts already below the euro-area average.
In the simulator, a large merchant currently paying 0.25% keeps that individual ceiling. Its online digital euro fee remains capped at 0.25%, below the illustrative 0.30% MSC.
An all-in MSC
Parliament wants transaction charges aggregated into one MSC expressed as a percentage of processed value.
The rule addresses a weakness of the card market.
The European Court of Auditors says contracts, complex pricing and confidentiality clauses make merchant charges very difficult to observe.
A standardised MSC would improve:
- comparison;
- enforcement;
- least-cost routing;
- publication of statistics.
It may not remove every fixed charge or additional service. The final law must prevent those categories from rebuilding the transaction fee under another name.
Offline remains contested
Parliament wants no inter-PSP fee on offline payments and describes the modality as entirely fee-free.
The Council proposes proxy compensation. Acquirers would contribute to a common pool redistributed according to funding and defunding activity.
The final compromise must choose between two principles.
An offline payment resembles cash and generates no fee at the moment of exchange.
PSPs still need compensation for devices, funding, maintenance and risk.
The cost does not disappear when the fee disappears.
Its allocation changes.
The cap redistributes payment revenue
An average merchant fee hides wide dispersion.
The ECB illustrates a €100 international-card transaction with an average merchant cost near €0.50. Some small merchants approach €1. Large merchants may pay around €0.25.
The same digital euro cap therefore produces three different effects.
Small merchants gain heavily if they move from 0.90% to 0.30%.
Average merchants gain moderately if they move from 0.50% to 0.30%.
Large merchants can lose if an average cap replaces a 0.25% negotiated contract. The no worse-off rule prevents this.
The De Nederlandsche Bank survey of 1,023 merchants shows the issue clearly.
Seventy-nine per cent fear high transaction fees.
Roughly two-thirds fear the necessary investment.
The Dutch market already has efficient and inexpensive account-to-account payments. A euro-area average can therefore exceed the local benchmark.
The right cap must balance:
- harmonisation;
- competition;
- acquirer viability;
- individual protection;
- national differences.
The central scenario as a sensitivity test
Under the simulator defaults:
- 10% of card payments migrate;
- annual value reaches roughly €353 billion;
- merchants mechanically save around €812 million;
- PSPs collect around €953 million in MSC;
- roughly €572 million goes to the distributing PSP in the illustration;
- the acquirer retains about €381 million before its own costs;
- public OPEX represents about 3.49 cents per transaction;
- OPEX plus development amortised over ten years represents about 4.91 cents.
The calculation exposes four constraints without reaching a conclusion on the digital euro’s profitability.
Adoption dilutes fixed public cost
At 5% adoption, the public layer mechanically costs twice as much per transaction as at 10%.
A lightly used sovereign infrastructure may still be valuable for resilience.
It remains expensive per operation.
The merchant fee funds the private chain
A very low MSC maximises merchant savings.
It reduces the ability of the acquirer and distributor to cover their costs.
Inter-PSP determines internal distribution
At a fixed merchant price, a higher inter-PSP fee enriches distribution and weakens acquiring.
The fee does not create new resources.
It divides the same envelope.
Fee-free offline shifts the bill
As the offline share rises, merchant savings increase under Parliament’s model.
Maintenance and risk must then be funded elsewhere.
The simulator therefore provides a consistency test for political promises.
A new source of pricing pressure on Visa and Mastercard
Payment sovereignty is one of the project’s central justifications.
The ECB estimates that international schemes processed about 61% of euro-area card transactions in 2022 and around 64% of electronic transactions initiated with euro-area-issued cards in 2023.
Thirteen countries rely entirely on international schemes for in-store card payments.
The European Court of Auditors estimates that Visa and Mastercard together represent close to 90% of the international-scheme segment.
The digital euro could remove some scheme fees and provide one common euro rail.
It would not immediately replicate every card function:
- credit;
- rewards;
- commercial guarantees;
- international chargeback;
- non-euro payments;
- foreign exchange;
- global acceptance.
The most plausible near-term outcome is progressive pressure on pricing power.
A merchant with a public rail and a European account-to-account option negotiates from a stronger position.
Sovereignty can therefore acquire economic value before taking a majority share.
Wero changes the sovereignty equation
Wero is already a European private rail. By mid-2026, EPI said the service was reaching about 56 million users, with:
- P2P in Belgium, France and Germany;
- e-commerce in Germany;
- expansion in Belgium and France;
- Payconiq migration in Luxembourg;
- gradual iDEAL migration in the Netherlands.
These operator figures document neither the activity of all 56 million users nor mature merchant volumes. They nevertheless show that Europe is already building a wallet and an A2A scheme.
They do prove that Europe is already building an A2A wallet and scheme.
Duplication
The digital euro and Wero each build:
- an app;
- aliases;
- QR;
- NFC;
- acquiring;
- certification;
- fraud controls.
Europe pays twice and fragments volume.
Public cannibalisation
Legal tender and mandatory acceptance give the digital euro a regulatory advantage.
Seigniorage funding removes selected fees from the public chain.
Private incentives to invest in Wero may weaken.
Integration
Wero becomes one interface.
The user chooses inside one wallet between:
- a bank account;
- digital euros.
Public money provides settlement.
Wero keeps:
- brand;
- UX;
- services;
- loyalty;
- subscriptions;
- commercial reach.
Common acceptance layer
The ECB promotes a more ambitious scenario.
Digital euro standards become open infrastructure usable by:
- Wero;
- domestic schemes;
- other A2A solutions;
- new entrants.
The merchant adapts its terminal once.
Several rails work through the same interfaces.
Public cost becomes a common good.
That promise depends on governance.
Questions remain:
- who controls the standards?
- who certifies?
- can the merchant choose the rail?
- is least-cost routing allowed?
- does Wero keep its brand?
- how are data shared?
- can suppliers actually be replaced?
Interoperability does not automatically produce integration.
It needs an economic agreement.
Potential winners and losers
| Actor | Possible gains | Costs or risks |
|---|---|---|
| Households | free basics, offline, competition, public money | bank costs passed elsewhere, complexity, indirect public cost |
| Small merchants | lower MSC, faster settlement, bargaining power | integration, terminals, support |
| Large merchants | resilience, least-cost routing | limited fee gain, another project |
| Banks | inter-PSP income, client relationship, additional services | investment, deposits, fraud, capped revenue |
| Non-bank PSPs | access to public money, more competition | funding dependency, KYC, disputed compensation |
| Wero | shared standards, pan-European acceptance | duplication or cannibalisation |
| Visa and Mastercard | continued global services | lower euro volume and pricing power |
| Eurosystem | monetary anchor and resilience | investment, OPEX, operational responsibility |
The table identifies no certain winner.
The outcome depends on:
- adoption;
- fees;
- mutualisation;
- liability;
- interoperability;
- market share.
The price of sovereignty
A sovereign infrastructure need not be cheaper on every transaction to create value.
It can provide:
- resilience;
- strategic autonomy;
- offline continuity;
- competition;
- an open standard;
- bargaining power;
- access to public money.
That value does not remove the need to count.
Sovereignty can become a word used to exempt a project from economic scrutiny.
This investigation reaches the opposite conclusion.
Sovereignty becomes credible when its cost, funding and beneficiaries are visible.
As of 14 August 2026, three unknowns remain decisive.
Total cost of ownership
Initial investment is partly documented.
Bank operations, vendors, merchants and exit costs are not.
Compensation
MSC and inter-PSP are capped in principle.
The levels, the funding bank and offline remain open.
Wero integration
A common infrastructure can reduce the cost of sovereignty.
Duplication can increase it dramatically.
The sixth and final part enters the machine itself: procurement, suppliers, national central banks, operating systems, secure elements, rights over code and reversibility. It asks:
Who controls the infrastructure once the bill has been paid?
Sources and method
This article relies primarily on:
-
ECB, 2025 payment statistics: first half, second half, exact count, and exact value.
-
EPI, Wero roll-out and reported audience in 2026: shareholder expansion and the iDEAL-to-Wero migration.
The simulator uses 2025 card volumes and explicitly adjustable assumptions. It is neither an adoption forecast, nor a recommended fee, nor an official estimate of social benefit. Inter-PSP compensation can be modelled as a percentage of value or as a fixed amount per transaction so that the two units cannot be confused.
Limits
- The final regulation has not been adopted.
- Fee levels remain unknown.
- Parliament and Council differ on offline compensation.
- Current MSC data remain incomplete.
- Banking estimates use interested and partly non-reproducible methodologies.
- Future vendor prices are not public.
- Reported Wero user counts leave active use unmeasured.
- The simulator allocates the full public cost to merchant transactions even though the infrastructure will also serve P2P, inclusion and resilience.
This analysis is not investment advice.
// cite this analysis
l0g, “Digital euro, 5/6: the price of sovereignty”, l0g.fr, published August 14, 2026, updated August 15, 2026, https://l0g.fr/en/analysis/digital-euro-5-price-of-sovereignty/
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