Spanish Banks Investigate Merging of Digital Euro into Current Payment Frameworks

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Whilst the future of the digital euro is still unknown, some Spanish banks have recently unveiled the outcomes of their digital euro trials, prominently featuring their experiments with Bizum, the bank-backed payment app that’s familiar to half of Spain’s populace.

Prominent Spanish banking institutions like Santander, BBVA, CaixaBank, and Sabadell actively engaged in this trial. Additionally, payment platforms such as Iberpay, Bizum, and Redsys played pivotal roles.

While the ECB has, until now, only delved into the CBDC framework at a broad scale, the current understanding is that banks will derive revenue from fixed merchant service fees. The proposed legislation mandates banks’ participation. Therefore, in a bid to cut down on the substantial integration costs tied to the digital euro, there’s a clear inclination to tap into existing infrastructures.

Results from the trials suggest a feasible integration of several existing components, notably from Bizum, depending on the ultimate structure of the digital euro. A salient feature of Bizum is its capability to link phone numbers and email addresses with banking accounts, streamlining P2P payment processes. Since its 2016 launch, Bizum broadened its scope to encompass e-commerce transactions and QR-based in-store payments.

There’s anticipation that Bizum could integrate with other European platforms. Its pre-existing functionalities—ranging from user onboarding and transaction processing to fraud mitigation—could be pivotal in driving the acceptance of the digital euro, given Bizum’s already extensive reach.

A standout observation by Spanish banks was the potential for the offline digital euro experience to serve as a unique selling point. These institutions exhibit a pronounced eagerness to actively participate in CBDC advancements.

Spain’s financial landscape, with Iberpay at the forefront, has consistently showcased an interest in digital currency exploration. Even before the ECB initiated its digital euro endeavours, Spain embarked on its blockchain journey for intelligent payment solutions back in 2019. By 2021, this exploration broadened to assess the compatibility of blockchain tokens with CBDCs. While tokenized deposit discussions gather momentum globally, as seen with Germany’s interest in B2B DLT payments, Spain has yet to provide further insights on this front.

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