The European Central Bank has released detailed functional requirements for its upcoming digital euro pilot, offering the clearest picture yet of how the proposed currency would work in everyday payments. The document outlines how consumers, merchants and banks will interact with the system during a controlled pilot expected to begin in 2027, marking a significant step toward operational testing of the euro area’s future digital cash.
The functional specification accompanies the ECB’s recent call for payment service providers to participate in the pilot programme. Together, the documents suggest that the digital euro project has progressed beyond conceptual design and is entering a phase focused on real-world payment scenarios and system integration.
Under the proposed architecture, the digital euro would operate through a two-tier model. The Eurosystem would issue the digital currency and run the core infrastructure, while banks and other payment service providers would distribute wallets, onboard users and manage compliance requirements. This structure reflects the ECB’s long-stated intention to preserve the role of the private banking sector in the payments ecosystem.
Wallets, merchants and everyday payments
The pilot will revolve around digital euro wallets provided by participating payment service providers. These wallets will allow consumers to store digital euro balances, view transaction histories and send or receive payments. Merchant wallets will support payment acceptance and refunds, allowing businesses to process digital euro transactions similarly to card or mobile wallet payments.
The system will support several types of retail transactions, including person-to-person transfers, payments from consumers to merchants and merchant refunds to customers. These flows are designed to mirror the everyday payment interactions expected if the digital euro were launched across the euro area.
Importantly, the ECB plans to test multiple payment initiation methods during the pilot. These include QR code payments, contactless transactions using near-field communication technology, mobile wallet payments and online checkout transactions. Card-based payment options may also be supported, indicating that the digital euro is intended to integrate with existing payment infrastructure rather than replace it.
Offline functionality and system resilience
One of the most prominent features highlighted in the functional requirements is offline payment capability. The pilot will test transactions that can take place without an internet connection, allowing users to complete payments even during network outages.
In these scenarios, transaction data would be stored locally and synchronised with the digital euro infrastructure once connectivity is restored. The ECB views offline functionality as an essential component of a digital currency designed to replicate some of the resilience and accessibility of cash.
Security safeguards are also central to the system design. The pilot includes requirements for strong authentication, secure transaction signing and fraud monitoring. Special mechanisms are planned to prevent double spending during offline transactions, one of the technical challenges associated with digital cash systems.
Privacy model and transaction limits
The functional requirements reaffirm the ECB’s privacy framework for the digital euro. Payment service providers will manage customer identification and regulatory checks, while the Eurosystem will process only pseudonymised transaction data. According to the ECB, this approach aims to minimise the amount of personal information visible to the central bank while maintaining compliance with anti-money laundering regulations.
Strict safeguards will also apply during the pilot phase. Wallet balances, transaction sizes and participant numbers will be limited in order to reduce potential risks to financial stability and ensure the programme remains focused on testing operational performance rather than large-scale payment flows.
Preparing the euro area for digital public money
The digital euro pilot is expected to run for around a year and will involve selected users and merchants in controlled environments. By observing real payment behaviour and collecting feedback from participating banks and payment providers, the ECB hopes to refine the system before making further decisions about deployment.
The functional requirements suggest that much of the digital euro’s technical architecture has already been defined. The upcoming pilot will therefore focus less on theoretical design and more on validating how the system performs in practical settings.
For policymakers and industry participants, the pilot represents a crucial step in determining whether the digital euro can operate securely and efficiently alongside existing payment methods. Its results will likely influence both the final design of the currency and the broader debate about Europe’s monetary sovereignty in an increasingly digital payments landscape.
Related: ECB Digital Euro Pilot Reveals How Banks, Wallets and Payments Will Interact