Finnish Commerce Federation: Digital euro needed to reduce cost of retail payments  

The digital euro would be a digital form of cash, and it would be used alongside banknotes and coins in Europe. Just like cash, the digital euro would be money issued by a central bank, that is, the public sector, but phones and cards, for example, could be used to make payments with it.

With the introduction of the digital euro, the European Central Bank aims to support the role of central bank money as an anchor for the monetary system, to strengthen Europe’s strategic autonomy by offering a European alternative for retail payments, and to promote competition and payment efficiency in the euro area.

The Finnish Commerce Federation supports the central bank’s objectives and the introduction of the digital euro, as euro banknotes and coins would remain in use, but the digital euro would complement the supply of payment instruments. The Finnish Commerce Federation holds that more competition is needed in the digital payments sector, which is currently dominated by international credit card companies.

“It would be beneficial to have a European option to complement the existing international payment methods, as increased competition would result in lower costs for the commerce sector, companies and eventually consumers. At the same time, it would improve payment security,” says Simo Hiilamo, Director, Public Policy and Advocacy for the Finnish Commerce Federation.

“It is also crucial that the offline functionality of the payment method be taken into account during development,” Hiilamo continues.

The European Central Bank (ECB) is currently investigating the introduction of the digital euro. Last summer, the European Commission presented a legislative proposal on the digital euro. The proposal is due to be reviewed by the Parliament of Finland shortly. This autumn, the central bank will decide whether to launch the preparatory phase for the digital euro.

The digital euro must be easy to use and affordable

According to the Finnish Commerce Federation, the digital euro must be easy to use for businesses and consumers, and it should bring innovations to the payments market.

“The payment method must also provide the highest possible level of privacy protection for both consumers and businesses,” Hiilamo says.

From the point of view of business owners, the digital euro must be cost-effective and affordable compared to the currently available payment methods. Low costs will contribute to the adoption of the new payment method.

“There are good prerequisites for the digital currency, as the ECB has announced that the new payment method will be free to use. In addition, digital euro service providers, such as banks, have no credit risk at all when the value of the consumer’s digital euro wallet is on the central bank’s balance sheet,” Hiilamo says.

The cost of card payments has increased for years, and pricing is not transparent for businesses and consumers. According to a report by the Bank of Finland, in 2020, companies in the commerce sector paid €121.4 million for card payments.

“With the recent increases in inflation, the partially percentage-based pricing of card payments has generated credit card companies additional profits, and consumers will eventually have to cover these in the form of ballooning prices,” Hiilamo says.

Further information: Simo Hiilamo, Director, Public Policy and Advocacy, Finnish Commerce Federation, tel. +358 (0)50 350 7564, simo.hiilamo(at)kauppa.fi