Digital Euro Remuneration Model Focuses on Merchant Protection
The European Central Bank is working on a remuneration model for the digital euro, which will determine how much merchants pay in service fees. According to an analysis by three economists at the Bank of Italy, a market-wide cap based on the average of fees across the euro area would be the best way to protect merchants and limit costs.
The current system allows larger merchants to negotiate discounts with payment service providers (PSPs), while smaller ones pay significantly higher fees. The digital euro aims to eliminate these disparities, as it is a public good and its status as legal tender means that merchants must accept it for any transaction.
Two proposals are being considered: one that sets a market-wide cap, and another that provides a specific rule for each merchant based on the lowest price charged by PSPs. The analysis suggests that the first approach would meet the European Council's criteria of being compatible with current systems, free from service provider influence, and manageable.