EU does cross-border payments on the cheap
Thanks to the dying art of democracy, the European Union (EU) has brought in lower charges for cross-border payments in euro.
The EU says its plenary adopted by 532 votes in favour, 22 against and 55 abstentions, new rules to end discrimination against payment service users in the EU outside the Eurozone.
It explains that whereas consumers in the Eurozone benefit from the single euro payments area (SEPA), those living outside continue to pay high costs for cross-border payments in euro.
The idea is that consumers are protected against “excessive charges for currency conversions”.
Eva Maydell, rapporteur, and member of the European Parliament, says: “150 million EU citizens and six million businesses living and operating in countries outside the Eurozone have been paying much higher charges for transferring euro than their Eurozone counterparts. This will no longer be the case and all Europeans will pay significantly lower charges, which will save them more than €1 billion annually. This is the second, small EU revolution after the abolishment of roaming fees.”
She adds: “It is a huge step forward to completing the Single Market for payments, putting Eurozone and non-Eurozone businesses on a level playing field. We proved once again that the EU could solve swiftly and effectively its citizens’ real, everyday problems.”
According to the EU, before the end of the year, charges for cross-border payments in euro within the EU must be in line with charges for national payments made in the official local currency (the “same charge” rule).
Additionally, member states are free to impose rules on banks to apply the same charges to cross-border and domestic non-euro payments.
At each transaction, people will be informed about the amount to be paid in the local currency and the currency of their account.
Consumers will receive an electronic push notification such as a text message, e-mail or notification through the payer’s mobile or web banking application about the applicable currency conversion charges. These notification services have to be offered free of charge.
Banks would also have to disclose the estimated full cost of currency conversion in the case of bank transfers before the payment is made.