Italy has put forward a proposal to exempt digital euro transactions below €10 from merchant fees, a move designed to shield small businesses from the costs of adopting the new currency. The suggestion, revealed in documents seen by Euronews and confirmed by sources familiar with the talks, has gained traction among central banking circles, particularly at the European Central Bank (ECB).
The digital euro, a central bank digital currency intended to complement cash, is being developed with an eye to a potential first issuance in 2029, provided the necessary legislative framework is adopted this year. The ECB has been pushing for greater strategic autonomy in European payments, which currently rely heavily on US-based schemes such as Visa and Mastercard.
One of the most contentious issues in the Brussels negotiations is the so-called compensation model—how fees for digital euro transactions are distributed among participants. Since the digital euro will have legal tender status, merchants will generally be required to accept it, raising concerns that smaller retailers could be disproportionately burdened.
According to an EU diplomat who spoke on condition of anonymity, the Italian proposal involves a cap on merchant service charges of up to €0.02 for low-value transactions, particularly benefiting small merchants. "But we're open to consider a net zero, as de facto this would be the result anyway," the diplomat said, adding that such a solution would also simplify the framework.
The fee scheme is expected to be temporary, allowing the ECB to gather sufficient data before proposing a more permanent model. This data gap has been highlighted by the European Court of Auditors, which in a 2025 report found that the European Commission lacked adequate information on merchant service charges to effectively monitor the impact of price interventions in the payments market.
Why small merchants pay more
Negotiating documents indicate that small merchants typically pay higher fees than larger companies because they have weaker bargaining power with international payment schemes. These schemes are difficult to refuse, particularly when they are widely used. An ECB analysis suggests that small merchants can pay three to four times more in fees than their larger counterparts.
The Italian proposal is seen as a way to level the playing field, ensuring that the digital euro does not exacerbate existing inequalities. The move has been welcomed by small business associations across Europe, which have long complained about the dominance of US-based payment providers.
The issue will be examined by member states, the European Parliament, and the European Commission during the next round of negotiations in Brussels, according to an internal document seen by Euronews. The outcome will be crucial for the future of the digital euro, which is seen as a key component of Europe's push for financial sovereignty.
Italy's role in these talks is notable, given its recent political trajectory. The government in Rome has been active on multiple European fronts, from its longevity in power to its stance on Russian meddling. The proposal also aligns with Italy's broader interest in supporting small and medium-sized enterprises, which form the backbone of its economy.
As the digital euro moves closer to reality, the debate over fees is likely to intensify. The ECB has stressed that the digital euro is not intended to replace cash but to offer an additional, publicly backed payment option. For now, all eyes are on Brussels, where the final shape of the compensation model will be decided.
