Europe is moving to challenge the dominance of U.S. payment giants Visa and Mastercard, but a proposed digital euro is facing growing resistance from banks, politicians and privacy advocates.

The plan, backed by the European Central Bank, would introduce a state-supported digital currency designed to complement cash and existing banking services. Under proposals from the European Commission, citizens would use a digital wallet for both online and offline payments, with strict privacy safeguards.

If approved by the end of 2026, the digital euro could be rolled out for everyday payments by 2029.

Challenging US Dominance

Currently, Visa and Mastercard account for around 61% of card payments in the eurozone and dominate cross-border transactions. European leaders argue that reducing reliance on foreign providers is key to strengthening financial sovereignty.

The debate has intensified amid geopolitical tensions, particularly following the return of Donald Trump to the White House and his more confrontational trade stance.

Opposition from Banks and Industry

However, the proposal has sparked strong criticism from parts of the financial sector. Commercial banks warn that a retail digital euro could directly compete with their services and disrupt the balance between central bank and private money.

Daniel Baal said the current design risks turning central bank money into a direct competitor to bank deposits, while Martina Weimert, head of the European payments platform Wero, warned that giving the digital euro legal tender status could distort competition by forcing businesses to accept it.

Political Battle Ahead

Supporters argue the concerns are overstated, insisting that a digital euro would function like cash — a public good adapted for the digital age.

The proposal is now at the centre of a political battle in the European Parliament, led by Spanish lawmaker Fernando Navarrete Rojas, who has expressed scepticism and favours private-sector solutions.

While EU governments broadly support the initiative, divisions within Parliament mean the final outcome remains uncertain. A committee vote is expected in the coming months, with full approval targeted by the end of 2026.

If adopted, the digital euro could fundamentally reshape how Europeans pay — and who controls the system behind it.

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