Digital Euro's Adoption Hinges on Frictionless Sign-Up and Fast P2P Transfers
The European Central Bank's (ECB) plans for the digital euro have raised concerns about its adoption and usability. The central bank has spent significant political capital to get the legislation through a parliament that is ambivalent at best.
A recent study by OMFIF, in collaboration with Imperial College London's Centre for Financial Technology, simulated how three design decisions could impact adoption. The researchers used an agent-based model to analyze the behavior of buyers and their decision to adopt a new digital payment method.
The study found that sign-up process friction is a major barrier to adoption. The ECB should aim to keep the sign-up process under 20 minutes, similar to Swedish payments app Swish. Additionally, the digital euro's standalone app should optimize for fast peer-to-peer (P2P) transfers, matching or beating the speed of Swish.
The researchers also highlighted the importance of co-badging, which allows the digital euro to be used via a physical card or mobile wallet. This feature would improve adoption for in-store payments but is less crucial for P2P transactions.