Economy What is the digital euro and how it will change things for consumers and businesses in Europe

[Maciamo]

You may have heard of their digital euro. But what is it exactly? It has nothing to do with cryptocurrency stable coins like the USDT. It's way for the European Union to become an independent from American credit card companies like Visa and MasterCard by making card payments directly from consumers to businesses and therefore removing fees and privacy concerns over data stored by private card companies. Here is a video that explains everything very well.

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[Maciamo]

What is the Digital Euro?

The digital euro is a proposed central bank digital currency (CBDC) being developed by the European Central Bank (ECB) that would serve as a digital form of cash for the eurozone. Unlike cryptocurrencies such as Bitcoin, the digital euro would be issued and regulated by the ECB, ensuring stability and legal tender status across all euro area countries. It is designed to complement, not replace, physical euro banknotes and coins, offering citizens a public digital payment option backed by the central bank.

How It Works

The digital euro would function similarly to physical cash but in entirely digital form. Users would hold digital euros in a digital wallet and could make instant, secure payments online or offline without necessarily requiring a traditional bank account as an intermediary. Like cash transactions, basic use of the digital euro would be free of charge for all eurozone residents. The currency would offer universal acceptance throughout the euro area at any business that accepts digital payments.

Benefits for Europe and Europeans

Enhanced Financial Sovereignty and Independence
The digital euro would strengthen Europe's strategic autonomy by reducing reliance on foreign payment providers, particularly American companies like Visa and Mastercard that currently dominate European payment infrastructure. This decreased dependence protects the eurozone from potential economic pressure or coercion from external actors.

Greater Financial Inclusion and Privacy
The digital euro would increase access to the financial system for individuals without traditional bank accounts, promoting financial inclusion across Europe. It would protect privacy through offline payment capabilities that maintain the anonymity associated with physical cash.

Improved Payment Efficiency and Innovation
By enabling instant, low-cost transactions, the digital euro would reduce transaction costs and processing times for both consumers and businesses. It would also stimulate innovation in the financial sector by creating a unified digital payment infrastructure that encourages new services and solutions.

Increased Economic Resilience
The digital euro would make the eurozone payment landscape more robust and adaptable to future financial challenges. It helps unify the currently fragmented European payments market and provides a secure public alternative if private payment systems face disruptions.

Timeline and Current Progress

In October 2025, the ECB's Governing Council decided to move the digital euro project to its next phase following successful completion of the preparation phase that began in November 2023. European leaders have called for accelerated progress, with pilot exercises potentially starting in mid-2027 and the Eurosystem aiming for a possible first issuance during 2029, contingent on legislative approval expected in 2026.

 

[Maciamo]

In the meantime people in France, Germany and Benelux can use Wero, a P2P digital wallet linked to one's bank account. It's already available in many online shops in these countries and should expand to physical shops and supermarkets in 2026.

 

[Maciamo]

Another concern is that Visa and Mastercard now increasingly following the Neo-Conservative agenda under the pressure from (mostly fundamentalist) Christian groups in the US. This can already be seen in the video game industry.

In mid-2025, Visa and Mastercard exerted significant pressure on Steam (Valve) to remove specific types of adult games from its storefront.

This decision was not an internal policy change by Steam but rather a forced response to threats from payment processors, who warned they would cease processing payments for the entire platform if certain content remained available.

The Core Conflict

The crackdown began around July 2025, following a campaign by an Australian anti-pornography advocacy group called Collective Shout. The group issued open letters to Visa, Mastercard, and other financial institutions, highlighting specific games on Steam and Itch.io that featured themes such as incest and sexual violence.

In response to this pressure, Visa and Mastercard demanded that Steam and other marketplaces remove titles that violated their payment network standards. Valve (Steam's owner) confirmed this in messages to developers, stating that they had to retire certain games because "loss of payment methods would prevent customers from being able to purchase other titles and game content on Steam".

What Games Were Affected?

The ban did not apply to all games with adult content, but rather a specific subset targeted by the payment processors' new enforcement standards.

• Targeted Content: The crackdown focused heavily on "Not Safe For Work" (NSFW) titles, particularly those with themes of non-consensual sexual acts, incest, or other "morally objectionable" content as defined by the pressure groups.
• Collateral Damage: While the intent was to remove extreme content, there were reports of "indiscriminate" removals where games with mature themes—but not necessarily explicit illegal content—were also caught in the sweep.
• Other Platforms: This was not exclusive to Steam. The indie game platform Itch.io was also forced to temporarily hide all NSFW content and delete specific games to preserve its ability to process credit card payments.

The Dispute Between Valve and Mastercard

There was public friction regarding who was actually responsible for the censorship.

• Mastercard's Position: Mastercard publicly denied that it was "pressuring" platforms or censoring specific games, claiming it was simply enforcing existing rules against illegal content.
• Valve's Rebuttal: Valve pushed back against this narrative, explicitly telling developers and news outlets that they were being forced to act by the "rules and standards set forth by our payment processors". Reports suggested that payment networks threatened broad fines or service termination if the platforms did not comply.

 

[Maciamo]

Visa and Mastercard have a long and documented history of using their duopoly over global payments to exert pressure, enforce "moral" standards, or de-platform industries and organizations. These actions often bypass the legal system, effectively acting as private regulators of what can be bought and sold online. Here are more examples besides video games.

The Financial Blockade of WikiLeaks (2010)

One of the most famous instances of political pressure via payment processors.

• The Event: After WikiLeaks published classified US diplomatic cables, Visa, Mastercard, PayPal, and others simultaneously blocked all donations to the organization, despite WikiLeaks not having been charged with a crime in any country at the time.
• The Result: WikiLeaks lost 95% of its revenue overnight, creating a "financial blockade" that nearly bankrupted the organization. The blockade was widely criticized as an extrajudicial tool of US foreign policy.

Catalan Independence Referendum (Spain, 2017)

A notable instance of payment processors being used to stifle political movements within an EU democracy.

• The Context: During the lead-up to the unauthorized Catalan independence referendum, the Spanish government sought to block the logistics and funding of the vote.
• The Pressure: Spanish authorities ordered payment service providers to block transactions related to the referendum. While much of this was direct police action (seizing domains), there were reports that payment channels for organizations supporting the vote were disrupted, effectively freezing their ability to collect funds for legal defense or logistics.

Japan: The "Manga" Purge

This is a lesser-known but significant cultural clash where Western payment standards were imposed on Japanese media.

• The Issue: Japanese e-commerce sites selling "doujinshi" (indie manga/comics) often feature content that is legal in Japan but considered "obscene" by Western standards (e.g., certain lolicon or pixelated content).
• The Pressure: In 2024-2025, major Japanese platforms like DLsite and Melonbooks were forced to stop accepting Visa and Mastercard for broad categories of adult content. To survive, some sites had to rename "adult" categories to vague euphemisms or create their own point-based payment systems to bypass the card networks directly.

VPN Services & File Hosting

• VPNs: In 2013, there were reports of Visa and Mastercard blocking payments to VPN providers (like iPREDator) that were associated with The Pirate Bay or refused to log user data. While the companies denied a blanket ban, they admitted to requiring strict "anti-anonymity" compliance.
• File Lockers: Payment processors have historically maintained unwritten rules against file-hosting sites with affiliate programs (often used for piracy), deeming them "high risk" and cutting off their ability to process subscriptions.

Cannabis Dispensaries (2023)

While cannabis is legal in many US states, it remains illegal at the federal level.

• The Event: In July 2023, Mastercard issued a directive to financial institutions to stop allowing cannabis transactions on its debit cards.
• The Result: This forced legal dispensaries across the US to revert to cash-only operations or use less secure "cashless ATM" workarounds, effectively shutting them out of the modern banking system.

Cryptocurrency & Exchange Bans (UK & EU)

Visa and Mastercard have frequently blocked or restricted payments to crypto exchanges, often citing "consumer protection" but effectively acting as gatekeepers for financial regulators.

• Binance (2023–2025): There have been multiple waves of restrictions where Visa and Mastercard suspended deposits and withdrawals for Binance users in the UK and parts of Europe. In late 2025, for instance, Binance confirmed a suspension of card transactions for users in Ukraine due to "strengthened regulatory oversight in Europe".
• UK Banking Blockade: Major UK banks (like Barclays and Nationwide), often working in tandem with card network policies, have blocked customers from using credit cards to buy crypto entirely, citing compliance with the Financial Conduct Authority (FCA).

Nationwide bans

The nationwide bans in countries like Iran, Syria, and North Korea are the most extreme examples of payment processors acting as instruments of US foreign policy. Because Visa and Mastercard are US-headquartered companies, they are legally bound by US Treasury sanctions (OFAC), which forces them to completely disconnect entire nations from their global networks.

Iran

Iran is the most prominent example of a modern economy being completely "de-banked" by Western payment systems.

• The Mechanism: Due to long-standing US sanctions, Visa and Mastercard are strictly prohibited from processing any transactions involving Iranian banks or merchants. This is not a choice by the companies but a legal requirement under US law.
• The Impact on Citizens: Ordinary Iranians cannot use international credit cards. They cannot buy goods from Amazon, subscribe to Netflix, or pay for services like Steam or Spotify directly. Inside Iran, they use a completely separate domestic card network (called Shetab) that works only within the country. If an Iranian travels abroad, their domestic cards are useless; they must carry cash.

Syria

• The Ban: In 2011, following the outbreak of the civil war and subsequent US sanctions, Visa and Mastercard cut off all services in Syria.
• The Impact: Syrian-issued cards stopped working instantly, both inside the country and for Syrians traveling abroad. Even today, the country remains largely cash-based for international purposes, with businesses forced to use accounts in neighboring Lebanon (which are themselves now unstable) to process any foreign transactions.

Russia (Crimea & Nationwide)

• Crimea (2014): Long before the full invasion of Ukraine, Visa and Mastercard cut off operations specifically in the Crimean peninsula after its annexation by Russia. This created a "financial island" where Russian cards worked elsewhere but stopped working the moment the user crossed into Crimea.
• Nationwide (2022): As noted earlier, the 2022 invasion led to a total exit. Russian-issued Visa/Mastercards stopped working globally, and foreign cards stopped working inside Russia. Russia had prepared for this by building its own "Mir" payment system, but it remains isolated from the rest of the world.

North Korea

• Status: Completely blocked. There has never been a functioning Visa/Mastercard network in North Korea due to near-total sanctions. The country uses a strictly internal debit card system (like "Jonsong") that is state-controlled and has zero connectivity to global finance.

Venezuela

Payment processors have been a primary tool for enforcing US sanctions, often affecting ordinary citizens.

• The Blockade: Following US sanctions in 2019, Mastercard and Visa cut off services to specific Venezuelan banks sanctioned by the US Treasury (such as Banco de la Fuerza Armada Nacional Bolivariana).
• The Impact: This effectively disabled credit and debit cards for millions of Venezuelan citizens who banked with these institutions, preventing them from making basic daily purchases. The move was a direct implementation of US foreign policy by private financial networks.

Cuba

• The "Not Quite" Ban: Technically, US sanctions have loopholes for licensed travel and remittances. However, for decades, most US-issued cards simply did not work in Cuba.
• The Shift: In 2015, Mastercard lifted the blanket ban following the Obama-era thaw, but in practice, many issuers still block transactions due to the high compliance risk. It remains a "grey zone" where acceptance is spotty and unreliable compared to the total bans in Iran or North Korea.

Sudan

• The Return: For decades, Sudan was under a total US sanction regime similar to Iran, meaning no Visa/Mastercard.
• The Thaw: After the sanctions were lifted in 2020 following the ousting of Omar al-Bashir, Visa began to slowly re-enter the market. However, the subsequent civil war has complicated this "re-banking" process, showing that political instability can physically destroy the infrastructure needed for these networks even after legal bans are lifted.

 

[Duarte]

Anything that threatens the Visa/Mastercard duopoly or the payment systems implemented by big tech companies like Apple Pay, Google Pay, or WhatsApp Pay becomes a case of "existential threat" for the US. The successful implementation of the instant payment system in Brazil, called PIX, and its universal adoption in the country by the government, population, and businesses as the main means of electronic payment was one of the reasons for the imposition of a 50% import surcharge on Brazilian products, in addition to the opening U.S. investigation about whether a state-operated, near-zero-cost payment system violates principles of “fair competition” under international trade norms.
About the PIX:
PIX is Brazil’s instant payment system, created and operated by the Central Bank of Brazil (BCB). It allows money transfers 24/7, in real time, directly between bank and fintech accounts. Here’s how it works in practice and behind the scenes.
1. Who operates PIX

• Central Bank of Brazil (BCB) is the system owner and regulator.
• Banks, digital banks, and payment institutions connect to the PIX infrastructure.
• Participation is mandatory for large financial institutions and optional for smaller ones.

2. How a PIX payment happens (step by step)
a) Identification via a “PIX key”
Instead of sharing bank details, users register PIX keys, such as:

• CPF or CNPJ (tax ID)
• Mobile phone number
• Email address
• Random key (generated by the system)

A key links directly to a bank account.
b) Payment initiation
The payer can send money by:

• Entering a PIX key
• Scanning a QR Code (static or dynamic)
• Manually entering bank/account details (less common)

This is done via a bank or fintech app.
c) Instant settlement

• The transaction is routed through the SPI (Instant Payments System), operated by the Central Bank.
• Funds are settled in seconds, usually under 10 seconds.
• Settlement is final and irrevocable (no chargebacks like credit cards).

3. Availability and speed

• Works 24/7, including weekends and holidays.
• No batch processing — settlement is real-time gross settlement.

4. Costs

• Individuals: usually free.
• Businesses: may pay small fees depending on the bank.
• Much cheaper than card networks or traditional bank transfers.

5. Use cases

• Person-to-person transfers (P2P)
• Online and in-store payments
• Utility bills and government payments
• Business collections and payroll
• E-commerce and subscriptions

PIX has largely replaced:

• TED/DOC transfers
• Cash for small payments
• Debit cards for many transactions

6. Security and fraud controls

• Strong customer authentication via banking apps
• Transaction limits (especially at night)
• Fraud monitoring by banks and the Central Bank
• PIX Mediation and refund mechanisms for fraud cases (with limitations)

7. Key innovations

• QR codes standardized nationwide
• Open participation (banks and fintechs)
• Low cost, high speed
• Interoperability across the entire financial system

8. Recent and upcoming PIX features

• PIX Saque / PIX Troco (cash withdrawal at merchants)
• Scheduled PIX
• Recurring PIX (PIX Automático) for subscriptions and bills
• Integration with Open Finance
• Early discussions on cross-border PIX interoperability

9. Why PIX is considered a global benchmark

• Central-bank-operated infrastructure
• Universal reach in a large economy
• Near-zero cost
• Extremely fast adoption

Many countries and regions (including Europe, the US, and emerging markets) study PIX as a reference for instant payment systems.
About the US investigation:
The U.S. investigation related to Brazil’s PIX is not about illegality by PIX itself, but about whether Brazil’s payment model creates unfair competitive conditions for U.S. companies, especially large card networks and payment platforms. Here’s the logic behind it.

1. Who initiated the concern in the US

• The issue emerged within the U.S. Trade Representative (USTR) framework.
• Complaints were raised mainly by U.S.-based payment companies (credit card networks, payment processors, big tech payment platforms).
• These firms argued that PIX distorts competition in Brazil’s payments market.

This triggered a trade-policy investigation, not a criminal or antitrust case in the Brazilian sense.
2. Core accusation: “State-backed unfair competition”
From the U.S. perspective, PIX has three characteristics that raised red flags:
a) Central-bank-operated infrastructure

• PIX is designed, owned, and operated by Brazil’s Central Bank.
• The U.S. argument: the Brazilian state is acting simultaneously as regulator, infrastructure provider, and rule-setter.

U.S. firms argue this gives PIX an implicit subsidy advantage over private systems.
b) Mandatory participation for large banks

• In Brazil, large banks are required to participate in PIX.
• This guarantees instant scale and network effects.

From a U.S. trade-law view, this looks like the state forcing market adoption, limiting space for private alternatives.
c) Pricing close to zero

• PIX transactions are:
  • Free for individuals
  • Very low-cost for merchants

U.S. companies argue this is equivalent to predatory pricing, made possible only because PIX is not profit-driven.
3. Impact on U.S. companies’ business models
PIX directly undermines:

• Credit and debit card fees
• Interchange revenues
• Cross-border payment margins
• Wallet ecosystems (Apple Pay, Google Pay, PayPal, etc.)

In Brazil:

• Card usage growth slowed
• Merchant discount rates fell
• Cash and card networks lost volume

From the U.S. viewpoint, PIX reshaped the market too quickly for private competitors to respond.
4. Why this becomes a “trade” issue, not just a domestic one
Under U.S. trade law, especially:

• Section 301 of the Trade Act of 1974
• WTO principles on national treatment and market access

The U.S. can investigate whether:

• A foreign government policy discriminates against foreign firms
• Or creates non-tariff barriers to services trade

The claim is not that U.S. firms are banned, but that:
“They cannot realistically compete against a free, state-run payment rail.”
5. Brazil’s counterargument (and why it’s strong)
Brazil’s position is essentially:

• PIX is public infrastructure, like:
  • Roads
  • Power grids
  • The internet backbone
• It is open-access and non-discriminatory
• Any domestic or foreign firm can use PIX under the same rules
• The Central Bank does not operate retail services, only infrastructure

In short:
PIX competes with no one directly — it enables competition.
This argument aligns with:

• Financial inclusion goals
• Consumer welfare
• Reduced systemic risk

6. The real underlying conflict: two payment philosophies

US Model​	Brazilian PIX Model​
Market-led, private networks	Public digital infrastructure
High fees fund innovation	Low cost maximizes inclusion
Fragmented payment rails	Single interoperable rail
Profit-driven	Public-interest-driven

7. Why this matters globally
If PIX is deemed acceptable:

• Other countries may copy the model
• Card networks and big payment firms face margin pressure worldwide
• Cross-border instant payment systems could bypass SWIFT and card rails

That’s why the investigation is as much geopolitical as economic.
8. Bottom line
The U.S. investigation is not about fraud or illegality, but about whether:
A state-operated, near-zero-cost payment system violates principles of “fair competition” under international trade norms.
So far, there is no finding that PIX is illegal, and many experts believe Brazil has a strong legal and economic defense.