Offline digital euro payments hinge on secure chip tech in smartphones, ECB says

The future of offline digital euro payments remains uncertain as the ECB struggles to strike deals with smartphone manufacturers.

The European Central Bank may abandon offline digital euro payments if it cannot agree on secure chip integration with smartphone manufacturers. In its digital euro progress report published on December 2, the central bank emphasized that secure elements (special hardware chips built into mobile devices) are required to ensure that offline transactions can be carried out safely and reliably.

The ECB detailed ongoing discussions with device manufacturers and technical service providers to tackle the complexity of implementing offline digital euro solutions. However, if no consensus can be reached on implementation, the project may eventually face potential delays or downsizing altogether.

“Due to its highly controlled environment, remote deployment of an application is complex and requires multiple stakeholders.”

European Central Bank

While the ECB is exploring digital euro features, its offline use could potentially be limited without agreement from technology partners. So far it remains unclear whether the offline feature will move forward or remain a conceptual idea given that this challenge is not specific to the Eurozone.

Sweden’s Riksbank, for example, in its latest research report also highlighted the technical and regulatory hurdles to enabling secure offline payments with e-krona, the digital currency proposed by the country’s central bank.

The Riksbank warned of liquidity risks arising from asynchronous balances between offline and online wallets, creating potential availability and security issues for offline transaction recipients. To mitigate such risks, the Riksbank suggested solutions such as restricted offline use or centralized liquidity pools, but acknowledged that these needed further evaluation.