diff --git a/packages/taler-wallet-cli/src/integrationtests/harness.ts b/packages/taler-wallet-cli/src/integrationtests/harness.ts
index 169aa8aa4..2b26ef7fc 100644
--- a/packages/taler-wallet-cli/src/integrationtests/harness.ts
+++ b/packages/taler-wallet-cli/src/integrationtests/harness.ts
@@ -1195,7 +1195,7 @@ export class MerchantApiClient {
 
   async deleteInstance(instanceId: string) {
     const baseUrl = this.baseUrl;
-    const url = new URL(`private/instances/${instanceId}`);
+    const url = new URL(`private/instances/${instanceId}`, this.baseUrl);
     await axios.delete(url.href, {
       headers: this.makeAuthHeader(),
     });
diff --git a/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances-delete.ts b/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances-delete.ts
new file mode 100644
index 000000000..e6f7d5741
--- /dev/null
+++ b/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances-delete.ts
@@ -0,0 +1,126 @@
+/*
+ This file is part of GNU Taler
+ (C) 2021 Taler Systems S.A.
+
+ GNU Taler is free software; you can redistribute it and/or modify it under the
+ terms of the GNU General Public License as published by the Free Software
+ Foundation; either version 3, or (at your option) any later version.
+
+ GNU Taler is distributed in the hope that it will be useful, but WITHOUT ANY
+ WARRANTY; without even the implied warranty of MERCHANTABILITY or FITNESS FOR
+ A PARTICULAR PURPOSE.  See the GNU General Public License for more details.
+
+ You should have received a copy of the GNU General Public License along with
+ GNU Taler; see the file COPYING.  If not, see <http://www.gnu.org/licenses/>
+ */
+
+/**
+ * Imports.
+ */
+import { URL } from "@gnu-taler/taler-wallet-core";
+import axios from "axios";
+import {
+  ExchangeService,
+  GlobalTestState,
+  MerchantApiClient,
+  MerchantService,
+  setupDb,
+} from "./harness";
+
+/**
+ * Test instance deletion and authentication for it
+ */
+export async function runMerchantInstancesDeleteTest(t: GlobalTestState) {
+  // Set up test environment
+
+  const db = await setupDb(t);
+
+  const exchange = ExchangeService.create(t, {
+    name: "testexchange-1",
+    currency: "TESTKUDOS",
+    httpPort: 8081,
+    database: db.connStr,
+  });
+
+  const merchant = await MerchantService.create(t, {
+    name: "testmerchant-1",
+    currency: "TESTKUDOS",
+    httpPort: 8083,
+    database: db.connStr,
+  });
+
+  // We add the exchange to the config, but note that the exchange won't be started.
+  merchant.addExchange(exchange);
+
+  await merchant.start();
+  await merchant.pingUntilAvailable();
+
+  // Base URL for the default instance.
+  const baseUrl = merchant.makeInstanceBaseUrl();
+
+  {
+    const r = await axios.get(new URL("config", baseUrl).href);
+    console.log(r.data);
+    t.assertDeepEqual(r.data.currency, "TESTKUDOS");
+  }
+
+  // Instances should initially be empty
+  {
+    const r = await axios.get(new URL("private/instances", baseUrl).href);
+    t.assertDeepEqual(r.data.instances, []);
+  }
+
+  // Add an instance, no auth!
+  await merchant.addInstance({
+    id: "default",
+    name: "Default Instance",
+    paytoUris: [`payto://x-taler-bank/merchant-default`],
+    auth: {
+      method: "external",
+    },
+  });
+
+  // Add an instance, no auth!
+  await merchant.addInstance({
+    id: "myinst",
+    name: "Second Instance",
+    paytoUris: [`payto://x-taler-bank/merchant-default`],
+    auth: {
+      method: "external",
+    },
+  });
+
+  let merchantClient = new MerchantApiClient(merchant.makeInstanceBaseUrl(), {
+    method: "external",
+  });
+
+  await merchantClient.changeAuth({
+    method: "token",
+    token: "secret-token:foobar",
+  });
+
+  merchantClient = new MerchantApiClient(merchant.makeInstanceBaseUrl(), {
+    method: "token",
+    token: "secret-token:foobar",
+  });
+
+  // Check that deleting an instance checks the auth
+  // of the default instance.
+  {
+    const unauthMerchantClient = new MerchantApiClient(
+      merchant.makeInstanceBaseUrl(),
+      {
+        method: "external",
+      },
+    );
+
+    const exc = await t.assertThrowsAsync(async () => {
+      await unauthMerchantClient.deleteInstance("myinst");
+    });
+    console.log(exc);
+    t.assertAxiosError(exc);
+    t.assertDeepEqual(exc.response?.status, 403);
+  }
+}
+
+runMerchantInstancesDeleteTest.suites = ["merchant"];
diff --git a/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances.ts b/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances.ts
index 5d1c06e1e..fe7f28b49 100644
--- a/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances.ts
+++ b/packages/taler-wallet-cli/src/integrationtests/test-merchant-instances.ts
@@ -168,7 +168,7 @@ export async function runMerchantInstancesTest(t: GlobalTestState) {
     );
 
     const exc = await t.assertThrowsAsync(async () => {
-      await unauthMerchantClient.deleteInstance("");
+      await unauthMerchantClient.deleteInstance("myinst");
     });
     console.log(exc);
     t.assertAxiosError(exc);
diff --git a/packages/taler-wallet-cli/src/integrationtests/testrunner.ts b/packages/taler-wallet-cli/src/integrationtests/testrunner.ts
index 6b158e8d0..50850d6df 100644
--- a/packages/taler-wallet-cli/src/integrationtests/testrunner.ts
+++ b/packages/taler-wallet-cli/src/integrationtests/testrunner.ts
@@ -62,6 +62,7 @@ import CancellationToken from "cancellationtoken";
 import { runMerchantInstancesTest } from "./test-merchant-instances";
 import { runMerchantInstancesUrlsTest } from "./test-merchant-instances-urls";
 import { runWalletBackupBasicTest } from "./test-wallet-backup-basic";
+import { runMerchantInstancesDeleteTest } from "./test-merchant-instances-delete";
 
 /**
  * Test runner.
@@ -87,6 +88,7 @@ const allTests: TestMainFunction[] = [
   runLibeufinRefundTest,
   runMerchantExchangeConfusionTest,
   runMerchantInstancesTest,
+  runMerchantInstancesDeleteTest,
   runMerchantInstancesUrlsTest,
   runMerchantLongpollingTest,
   runMerchantRefundApiTest,