EU Moves to Make Fairer Euro Transfers, Currency Conversions

Aiming to facilitate trade, ensure transparency and boost competition, the European Commission proposed on Wednesday, legislation that will make cross-border payments in euros cheaper across the EU, extended further to consumers and businesses in non-euro countries allowing all intra-EU cross-border payments in euros outside the eurozone to be priced the same as domestic payments in the local official currency.

EU banks will be required to cut fees on cross-border payments in euros and on some currency conversions within the Union lowering consumers’ costs and slashing profits mostly for non-EU banking institutions.

Under the same proposal, the Commission is looking into ways to ensure transparency and competition to currency conversion services when consumers buy goods or services in a different currency than their own.

This will bring down steep fees which are currently an obstacle to the Single Market, creating barriers to cross-border activities of households – buying goods or services in another currency zone – and businesses, in particular SMEs.

“With today’s proposal we are granting citizens and businesses in non-euro area countries the same conditions as euro area residents when making cross-border payments in euro,” said Valdis Dombrovskis, vice-president responsible for Financial Stability, Financial Services and Capital Markets Union.

Valdis Dombrovskis, European Commission Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union © European Union, 2018

“All Europeans will be able to transfer money cross-border, in euro, at the same cost as they would pay for a domestic transaction. Today’s proposal will also require full transparency in currency conversion when consumers are paying by card in a country which does not have the same currency as their own.”

More specifically, fees charged for cross-border payments in euro will be the same as those charged for equivalent domestic payments in the local currency.

At the same time, the proposal will require that consumers are fully informed of the cost of a currency conversion before they make payments with cards abroad, including cash withdrawals at ATMs or card payments at a point of sale, or online.

In this direction, the European Banking Authority will be tasked with drafting the necessary Regulatory Technical Standard.

The legislative proposal is set to be tabled in the European Parliament and Council for adoption.

Meanwhile, banks in Britain now and throughout the Brexit transition period will also have to cut cross-border transaction fees to the same level applied for domestic payments, which are usually free.