Spanish banks find that digital euro can run on existing payment rails

A working group of 30 Spanish banks and payment services providers, including BBVA, Banco Sabadell, Banco Santander, CaixaBank and Iberpay, have completed a proof of concept (PoC) trial for digital euro transactions and recommended that the proposed central bank digital currency (CBDC) is designed to leverage existing payments infrastructure.

The working group tested digital euro payments across a range of use cases including contactless in-store payments, ecommerce transactions and peer-to-peer (P2P) transfers in order to analyse how the CBDC could co-exist with and use digital payment instruments including 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 (e.g. 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,” a Finextra report quotes the consortium as saying.

“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.

“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.”

“The digital euro project should […] exploit all possible synergies with instant payments, building on existing infrastructures and solutions, rather than developing new ones from scratch, while at the same time serving as a driver for the expansion and interconnection of domestic instant payment solutions,” adds BBVA’s Pablo Urbiola in a blog post.

“This would facilitate the deployment of the digital euro more efficiently and allow it to gain traction faster. In addition, payments could be made throughout the euro zone – without the mediation of foreign companies – in both central bank money (the digital euro) and commercial bank money (the current Bizum), thus widening consumer choice.”

BBVA, Banco Sabadell, Banco Santander, Caixa Guissona, Caixa Ontinyent, and Iberpay were among the banks and payment services providers that originally set up the working group to pilot the digital euro for in-store contactless payments in November 2022.

• The European Central Bank’s digital euro programme director Evelien Witlox recently reported on the ongoing development of the digital euro for NFCW’s Contactless World Congress. Watch the presentation here.

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