by Andrea Gnetti, CEO of Excellence Payments

It’s the 14th of February, 2029. This morning, I awoke early, stirred by the knowledge that this Valentine’s Day would be unlike any other. Just a few days ago, at the age of 35, I asked my girlfriend to marry me. I believe the time is right, and I intend to make this day extraordinarily special.

At 9 o’clock, I have an appointment with my barber, Antonio, who has been taking care of me since my youth. I arrive promptly, and within the customary half-hour, he transforms me into a decidedly more presentable version of myself. Visiting him feels akin to catching up with an old friend who tends to my thick, curly hair with the dedication and patience it demands.

The service costs 25 Euros. Antonio has never been particularly fond of electronic money, and I, for my part, have long since stopped withdrawing cash. However, we’ve recently overcome this hurdle. Today, at last, I can pay him by simply bringing my smartphone close to his, maintaining the same level of privacy as cash transactions and incurring no commission. Occasionally, I contemplate persuading him to accept standard credit cards and provide receipts, but I wouldn’t want to disrupt the enchantment of that half-hour escape from the world.

Upon leaving the barber’s, I check the remaining balance in my wallet; a mere 20 Euros, decidedly insufficient for the day ahead. I review my current account, which I use for daily expenses, only to find it nearing depletion, with the scant remainder earmarked for bill payments. Thus, I will need to dip into my savings account. After all, fully enjoying this day seems a worthy cause. I withdraw 250 Euros from my savings account and transfer them to my wallet. A few clicks, and within seconds, the funds are available.

My next stop is the florist’s. Faced with an array of choices, I seek his expert advice. He suggests the classic bouquet of 12 long-stemmed red roses for 90€, or alternatively, a triumphant arrangement composed of 10 white lilies, 7 pink peonies, and 5 red roses, totaling 130€. He also offers a payment plan, allowing me to pay off the cost over four months at no additional charge. I thank him, but I prefer to avoid debts. After a moment’s hesitation, I opt for the triumphant bouquet and part with 130€. I hope that the remaining 140€ will suffice for the seafood restaurant I’ve booked. Here in Milan, the prices have skyrocketed. I thank the florist for his guidance, pen a brief accompanying note – a few words that required a morning of deep thought, provide the delivery address, and make the payment with my wallet, a method all merchants must accept. I then take my leave of the store. Emanuele, the florist, tells me he’s quite taken with the new system, as it transfers the money to him in real time. It’s just like receiving cash, but with added security and ease of management.

Just outside, I receive a call from Riccardo, my 16-year-old nephew. He recently started dating Mirella, a petite girl with a gaze as lively as a summer’s day. This is his first real Valentine’s Day, and he’s determined not to falter. I step up to the plate and I suggest he reserve a table at Mario’s, a recently refurbished contemporary restaurant-pizzeria that, in my estimation, offers the perfect ambiance and space for a romantic dinner. Uncle’s solidarity compels me to support his endeavor with a contribution of 50€. Selecting his alias, Richi13, from my wallet, I transfer the 50€ to his account, a transaction that incurs no cost to me. Now, I find myself with a happy nephew and a significantly depleted budget. Here’s hoping we don’t splurge too much tonight, as a mere 90€ remains.

At 9 pm, we arrive punctually at “Sogno del Mare,” which, despite its not-so-original name, offers a quality and variety of dishes that, for me, are unparalleled. I had specifically requested a particular table placement. We are escorted to a quaint room housing merely three tables. The light gently bathes the room, and despite the other two tables being occupied, there is no discernible background noise. As soon as we sit down, they offer us two glasses of Franciacorta and a small appetizer. I peruse the wine list and opt for a barrel-aged Chardonnay. The die is cast; it’s clear that the budget will be exceeded, but I choose to disregard it. Before leaving home, I had linked my wallet to my savings account, and should the budget be exceeded, the additional necessary amount will be automatically withdrawn from there. Moreover, at ‘Sogno del Mare’, I have been enrolled in their loyalty program. For every 200€ spent there with my wallet, they offer a 10% discount on the next dinner, which, knowing myself, won’t be too far in the future.

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The day described is just one of the numerous scenarios in which the Digital Euro, or rather, the use that can be made of the Digital Euro Scheme through the dedicated wallet.

The use of the digital wallet itself may not seem exceptional. In fact, current payment methods already allow many, if not all, of the described operations:

• There are cards, like Curve, that offer the ‘anti-embarrassment mode’ function, allowing access to the funds of a second card when the main one is out of balance.
• The ability to exchange money in real-time without fees between private individuals is already a well-established reality, as demonstrated by PayPal.
• Cryptocurrencies allow us to exchange money anonymously, a feature that, unfortunately, has contributed to their success.

Therefore, it is not in the individual functionalities that the Digital Euro will represent an innovation. The reason why it represents a moment of discontinuity in the European payment landscape is the presence of all these functionalities in a single payment tool and its pervasiveness among consumers and merchants. Customers can activate and use the basic functionalities of their wallets without costs, while merchants will be obligated to accept the Digital Euro, albeit paying a merchant fee. This fee is potentially lower than those currently in the market, already gradually decreasing due to the competitive pressure characterizing the acquiring sector. The ECB will not require the payment of scheme fees to access to the Digital Euro Scheme, which should result in reduced costs for payment service providers, banks, EMIs, and payment institutions.

Despite the launch of the Digital Euro Scheme not being confirmed yet and likely taking several years to be completed, with an estimate not before 2029, it is crucial that market operators understand its peculiarities from now on. The introduction of the Digital Euro represents a significant change in the payment landscape, with potential repercussions on multiple market aspects. Therefore, it is essential that market operators start considering the Digital Euro in their future strategies. This will not only allow them to adapt more easily to the changes but could also offer unique opportunities to innovate and remain competitive in an ever-evolving market.