Italy has proposed exempting digital euro transactions below €10 from merchant fees, a move that could particularly benefit small businesses, according to sources and documents seen by Euronews.

The proposal has reportedly received support from the central banking community, including the European Central Bank (ECB), according to a banking sector source.

The digital euro is being developed as a digital form of payment that would complement cash. The ECB aims to be ready for a possible first issuance in 2029, provided the necessary legislation is adopted.

The initiative is also part of the EU’s broader effort to strengthen strategic autonomy in payments. Europe currently relies heavily on US-based payment networks such as Visa and Mastercard, making the digital euro a potential alternative.

As a proposed legal-tender payment method, merchants would generally be required to accept the digital euro, subject to specific exceptions. EU lawmakers are therefore negotiating how transaction fees should be shared among banks, payment providers and merchants, with particular attention to protecting smaller businesses.

Fee Model at the Centre of Negotiations

The distribution of fees, known as the “compensation model”, is one of the most sensitive issues in the ongoing Brussels negotiations. Another major topic is the “holding limit” — the maximum amount of digital euros that users could keep in their wallets.

An EU diplomat said negotiators were considering a merchant service charge cap of up to €0.02 for low-value transactions, particularly for small businesses. However, the diplomat indicated that a zero-fee approach could also be considered and might ultimately simplify the system.

According to internal negotiation documents, the proposed fee framework would initially be temporary. This would allow the ECB to collect more data on payment costs before potentially recommending changes to the model.

The European Court of Auditors has also highlighted the need for better data on payment fees. In a 2025 report, it said the European Commission lacked sufficient information on merchant service charges and costs to effectively assess existing payment-market interventions.

Small Businesses Face Higher Payment Costs

Negotiation documents indicate that smaller merchants generally pay higher fees than larger companies because they have less bargaining power with international payment networks.

According to an ECB analysis, small businesses can pay three to four times more in fees than larger merchants. This has increased pressure for the digital euro’s fee structure to avoid placing additional financial burdens on small businesses.

The proposal will be considered by EU member states, the European Parliament and the European Commission during the next stage of negotiations.

EU negotiators are scheduled to meet again in Brussels on Thursday, September 10, for further discussions on the digital euro framework.