Italy proposes fee exemption for digital euro payments under €10

Italy has proposed exempting digital euro transactions under €10 from fees, a move designed to benefit small businesses, according to sources and documents cited by Euronews. The central banking community, including the European Central Bank (ECB), reportedly views the proposal favourably.

The digital euro is intended as a digital payment form complementing cash, with the ECB hoping to be ready for a possible first issuance in 2029, provided the necessary regulation is adopted this year. Since Europe largely depends on US-based payment schemes such as Visa and Mastercard, the EU is pushing for greater strategic autonomy in payments, viewing the digital euro as one potential answer.

Because the digital euro would have legal tender status, merchants would generally be required to accept it, with certain exceptions. This is why legislators are currently negotiating how transaction fees should be shared among market participants, to avoid disadvantaging small merchants once the new currency is introduced.

Compensation model and holding limits

The distribution of fees, referred to as the "compensation model", is one of the most sensitive issues in the Brussels talks, alongside "holding limits" — the maximum amount of digital euro a person could keep in a wallet.

An EU diplomat, speaking on condition of anonymity, said the current proposal envisions a merchant service charge cap of up to €0.02 for low-value transactions, aimed particularly at small merchants, though officials are open to setting the fee at net zero since the practical outcome would likely be similar. Such an approach, the diplomat noted, would also simplify the framework.

Internal documents reviewed in connection with the talks indicate the fee arrangement would be temporary, giving the ECB time to collect sufficient data before proposing a permanent model. The European Court of Auditors has separately flagged the need for better data, noting in a 2025 report that the European Commission lacks sufficient information on merchant service charges to properly monitor the effects of existing price interventions in the payments market.

Other negotiation documents show that small merchants typically face higher fees than large companies because they have less bargaining leverage with international payment schemes, which are often hard to refuse given their widespread use. ECB analysis suggests small merchants can pay three to four times more in fees than larger ones. The issue will be discussed further by EU member states, the European Parliament and the European Commission at the next round of negotiations in Brussels, scheduled for Thursday, 10 September.