Details of the New Digital Euro Edition Revealed

The design of the digital euro includes offline functionality that would offer users a level of privacy like cash, for payments in physical stores and between individuals.

When paying offline, details of personal transactions would be known only to payers and recipients and would not be shared with payment service providers, the Eurosystem, or any supporting service providers, reports Investor.

Over recent months the ECB has agreed on the technical options needed to guarantee that online digital euro transactions will provide an even higher level of privacy than current digital payment solutions while ensuring strong protection for end-users against fraud.

The Eurosystem would use state-of-the-art measures, including pseudonymization, hashing, and data encryption, to ensure that it cannot directly link digital euro transactions to specific users.

Under current practice, payment service providers would only have access to personal data needed to ensure compliance with EU laws, such as anti-money laundering regulations. For the use of data for commercial purposes, payment service providers should have the express consent of the user. As the issuer and provider of payment infrastructure for the digital euro, the ECB will be subject to the supervision of independent data protection bodies that will monitor its compliance with the European Data Protection Regulation (EUDPR) and the General Data Protection Regulation (GDPR).

Offline digital euro

Eurosystem is developing an offline functionality that would allow users of the digital euro to pay without an internet connection after pre-funding their digital euro account via the internet or an ATM. Payments would take place directly between offline devices - e.g. mobile phones or payment cards - belonging to the users involved in the transaction, without the need to rely on third parties.

The ECB is investigating technical tools already available on the market that would enable the settlement of offline transactions with the digital euro directly on end-user devices. It also assessed other important aspects of offline digital euro payments, to make them seamless, secure, and user-friendly.

For offline payments, users could use their mobile devices, while Eurosystem is also exploring the potential use of battery-powered smart cards or non-powered smart cards that use a device to connect.

Effective implementation of the offline digital euro on mobile devices will ultimately depend on the requirements set for equipment manufacturers and electronic communications service providers in the Digital Euro Regulation.

It is envisaged that users will be able to link their digital Eurowallet to a commercial bank account, enabling them to pay via the digital Eurowallet without having to top up their digital wallets in advance.