Privacy-Enhancing Technologies and Auditability in Digital Payment Systems

Banca d'Italia today publishes 'Privacy-Enhancing Technologies and Auditability in Digital Payment Systems', the new issue of the series 'Markets, infrastructures, payment systems'.

As digital payment systems evolve, protecting privacy has become one of the main design challenges. On the one hand, digital transactions should protect users from unwarranted monitoring and data misuse. On the other, regulatory compliance requires mechanisms for oversight, traceability, and accountability. Balancing these objectives is particularly complex in institutional payment infrastructures, where public trust and regulatory responsibilities must coexist. This paper provides an overview of privacy-enhancing technologies (PETs) for digital payment systems, with particular attention to both decentralized architectures and centrally managed infrastructures. The paper also presents the main privacy goals - such as anonymity, confidentiality, and unlinkability - and the cryptographic tools used to achieve them, including blind signatures, commitments, and zero-knowledge proofs. Finally, the paper examines the auditability mechanisms that enable selective oversight without fully compromising user privacy, and highlights the main design trade-offs and architectural choices.