Cross-border payments: Parliament and Council reach an agreement on charges and transparency
Banks should charge equally for cross-border payments in euro and domestic payments in national currencies and enhance transparency of currency conversion costs, says the deal.
The Economic and Monetary Affairs Committee negotiators struck a deal with the Austrian Presidency with an aim to put an end to the existence of two categories of payment service users in the EU; those who benefit from the single euro payments area ('SEPA') and the users paying high costs for their cross-border payments in euro.
Charges for cross-border payments in euro within the EU will be aligned with charges for national payments made by a payment user in his or her own Member State in the official local currency (the ‘same charge’ rule).
Additionally Member States are free to extend the scope and equalise charges for cross-border and domestic non-euro payments.
Transparent currency conversions: card based transactions and bank transfers
Negotiators agreed to introduce additional measures protecting consumers against excessive charges for currency conversions and ensure that they are given the proper information. Consumers should be able to compare the costs of currency conversion done by the Dynamic Currency Conversion (DCC) provider (a bank of a merchant or a merchant itself) and those imposed by a customer’s own bank (non-DCC) and choose the best currency conversion option prior to the start of a transaction, at both a point of sale (POS) and an ATM.
Moreover the customers should be informed free of charge about the amount to be paid in the local currency and the currency of their account.
To make conversion costs more transparent, the negotiators agreed on single basis of expression of currency conversion charges for payments at a point of sale or ATM, as ECB reference rate + x%, with maximum mark-up rates set individually by banks.
Negotiators agreed that when using the currency conversion service provided by their bank, consumers should receive an electronic push notification such as SMS message, e-mail or notification through the payer's mobile banking application about the applicable currency conversion charges. Such notification will be sent free of charge by a customer’s own bank after the payment transaction in the other EU currency in addition to all other information available for the consumers such as information on a bank’s customer website, home-banking website or on mobile banking application.
The message should be sent again once in every month as long as a bank receives orders for transactions in that currency but a customer will be able to opt out from receiving this information.
Banks would also have to disclose the estimated full cost of currency conversion in case of bank transfers prior to the initiation of the payment. In addition to providing transparency for this type of payment, this should protect customers from the risks that banks would recoup the lost revenue stemming for the “same charge” rule.
Eva Maydell (EPP, BG), the lead MEP said: "No single member state could have achieved such a result. I was privileged to work for the equal treatment of citizens and businesses outside and inside the Eurozone and move the EU payments Single market one step closer to completion. Transferring euro across borders will be cheaper everywhere in the EU and currency conversion charges will be clearly communicated to consumers, thus ensuring better transparency and comparability. The Regulation is set to save billions of euros for citizens and businesses. I would like to thank all parties involved for the committed work to deliver results for Europeans in an extremely swift manner."
The agreement will now have to be officially confirmed with a plenary vote, which will take place early next year.