COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges
Date: 2018-03-28
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: bank charges, electronic banking, euro area, financial institution, financial legislation, financial services, intra-EU payment, payment, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.3.2018  SWD(2018) 84 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 924/2009 as regards certain charges on cross-border payments in the Union and currency conversion charges {COM(2018) 163 final} - {SWD(2018) 85 final}  
 
 
Contents 

1. 

INTRODUCTION.................................................................................................................................................................. 6 

1.1. 
1.1.1. 

Policy context and scope of the initiative ................................................................................................. 8 

Background ......................................................................................................................................................... 8 

1.1.2. 

Market context ................................................................................................................................................... 9 

2. 

PROBLEM DEFINITION ................................................................................................................................................. 13 

2.1. 
2.1.1. 

Problem description ........................................................................................................................................ 13 

Expensive fees for cross-border payments - a market analysis ............................................... 13 

2.1.2. 

Two categories of payment services users in the EU .................................................................... 17 

2.1.3. 
Restrictions to the Single Market: use cases that would benefit from reduced prices for 
cross-border transaction and volumes ..................................................................................................................... 18 

2.1.4. 

Views of payment services users ........................................................................................................... 19 

2.1.5. 

Summary ........................................................................................................................................................... 20 

2.2.  What are the problem drivers? ................................................................................................................... 21 
2.3.  How will the problem evolve? ..................................................................................................................... 23 
2.4.  A two-speed market based on a two-speed infrastructure ............................................................ 23 
2.5.  Why have Member States used or not-used the opt-ins of Regulation 924/2009? ............. 24 
2.6.  What is not covered under this Impact Assessment? ....................................................................... 25 
Limits to the Impact Assessment ............................................................................................................... 26 
2.7. 

3.  WHY SHOULD THE EU ACT? ....................................................................................................................................... 27 

3.1. 
3.2. 
3.3. 

Legal basis ............................................................................................................................................................ 27 
Subsidiarity: Necessity of EU action ......................................................................................................... 27 
Subsidiarity: Added value of EU action ................................................................................................... 28 

4. 

OBJECTIVES: WHAT IS TO BE ACHIEVED? ........................................................................................................... 29 

4.1. 
4.2. 

General objective ............................................................................................................................................... 29 
Specific objectives ............................................................................................................................................. 29 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .............................................................................................. 31 

5.1. 
The Baseline scenario – Do nothing .......................................................................................................... 31 
5.2.  Option 1: Extending Regulation 924 to local currencies cross-border transactions .......... 32 
5.3.  Option  2  –  Extending  Regulation  924  to  local  currencies  and  euro  cross-border 

transactions ......................................................................................................................................................... 32 
5.4.  Option 3 – Extending Regulation 924 only to euro cross-border transactions ..................... 32 
5.5.  Option  4  –  Extending  Regulation  924  to  all  cross-border  transactions  in 

currencies of Member States of the EU.................................................................................................... 33 
5.6.  Option discarded at an early stage ............................................................................................................ 33 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ................................................................................... 35 

6.1.  Overview of potential benefits and costs ............................................................................................... 36 
6.1.1. 

Potential benefits .......................................................................................................................................... 36 

6.1.2. 

Potential indirect benefits ......................................................................................................................... 40 

6.1.3. 

Overview of costs .......................................................................................................................................... 40 

6.2. 
Baseline scenario ............................................................................................................................................... 42 
6.3.  Option 1: Extending Regulation 924 to local currencies ................................................................. 43 
6.3.1. 

Benefits .............................................................................................................................................................. 43 

6.3.2. 

Costs .................................................................................................................................................................... 44 

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6.3.3. 

Overall assessment ....................................................................................................................................... 44 

6.4.  Option  2  –  Extending  Regulation  924  to  local  currencies  and  euro  cross-border 

payments ............................................................................................................................................................... 45 

6.4.1. 

Benefits .............................................................................................................................................................. 45 

6.4.2. 

Costs .................................................................................................................................................................... 46 

6.4.3. 

Overall assessment ....................................................................................................................................... 46 

6.5.  Option 3 – Extending Regulation 924 only to euro cross-border payments .......................... 47 
6.5.1. 

Benefits .............................................................................................................................................................. 47 

6.5.2. 

Costs .................................................................................................................................................................... 48 

6.5.3. 

Overall assessment ....................................................................................................................................... 48 

6.6.  Option 4 – Extending Regulation 924 to all currencies of Member States of the EU .......... 49 
6.6.1. 

Benefits .............................................................................................................................................................. 49 

6.6.2. 

Costs .................................................................................................................................................................... 50 

6.6.3. 

Overall assessment ....................................................................................................................................... 50 

HOW DO THE OPTIONS COMPARE? ........................................................................................................................ 52 

PREFERRED OPTION ..................................................................................................................................................... 53 

8.1. 
8.2. 
8.2.1. 

Impact on SMEs .................................................................................................................................................. 53 
Impact on Currency Conversion ................................................................................................................. 54 

The two currency conversion models .................................................................................................. 54 

8.2.2. 

Risk of costs passed on towards non-transparent factors .......................................................... 55 

8.2.3. 
Solution: Further transparency requirements to achieve comparability through 
Regulatory Technical Standards .................................................................................................................................. 56 

Impact on competitiveness ........................................................................................................................... 57 
8.3. 
8.4. 
Subsidiarity and Proportionality ................................................................................................................ 57 
8.5.  UK leaving the EU .............................................................................................................................................. 57 
8.6.  REFIT: Simplification and improved efficiency ................................................................................... 58 

HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? ....................................................... 59 

ANNEX 1: PROCEDURAL INFORMATION.............................................................................................................. 60 

Lead DG, Decide Planning/CWP references .......................................................................................... 60 
1.1. 
1.2.  Organisation and timing ................................................................................................................................. 60 
Exceptions to the better regulation guidelines .................................................................................... 61 
1.3. 
Consultation of the Regulatory Scrutiny Board ................................................................................... 61 
1.4. 
Evidence, sources and quality ..................................................................................................................... 61 
1.5. 

ANNEX 2: STAKEHOLDER CONSULTATION ........................................................................................................ 62 

ANNEX 3: WHO IS AFFECTED AND HOW? ........................................................................................................... 69 

3.1. 
3.2. 

Practical implications of the initiative ..................................................................................................... 69 
Summary of costs and benefits ................................................................................................................... 69 

7. 

8. 

9. 

1. 

2. 

3. 

4. 

ANNEX 4: A MARKET ANALYSIS ............................................................................................................................... 70 

Electronic transactions within the EU ..................................................................................................... 70 
4.1. 
Cross-border electronic transactions from EU Member States .................................................... 70 
4.2. 
The currency of cross-border transactions ........................................................................................... 73 
4.3. 
4.4.  A two-speed market based on a two-speed infrastructure ............................................................ 75 
The Swedish case .............................................................................................................................................. 79 
4.5. 
Further information on estimates used for calculations on potential savings ...................... 80 
4.6. 

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5. 

6. 

ANNEX 5: DETAILED LEGISLATIVE FRAMEWORK .......................................................................................... 83 

ANNEX 6: EVALUATION OF REGULATION 924/2009 .................................................................................... 86 

3 

 
 
 
 
 
Term or 
acronym 

Glossary 

Meaning or definition 

Card payment  A payment based on a payment card scheme's infrastructure and business rules to make a 

payment transaction by means of any card, telecommunication, digital or IT device or software 
if this results in a debit or a credit card transaction.  

Cash 
withdrawal 

A transaction allowing a cardholder to retrieve cash from its bank account through the use of a 
card. 

Credit transfer  A  payment  service  for  crediting  a  payee’s  payment  account  with  a  payment  transaction  or  a 
series of payment transactions from a payer’s payment account by the payment service provider 
which holds the payer’s payment account, based on an instruction given by the payer. 

Direct debit 

A  payment  service  for  debiting  a  payer’s  payment  account,  where  a  payment  transaction  is 
initiated by the payee on the basis of the consent given by the payer to the payee, to the payee’s 
payment service provider or to the payer’s own payment service provider. 

Money 
remittance 

A payment service where funds are received from a payer, without any payment accounts being 
created  in  the  name  of  the  payer  or  the  payee,  for  the  sole  purpose  of  transferring  a 
corresponding amount to a payee or to another payment service provider acting on behalf of the 
payee, and/or where such funds are received on behalf of and made available to the payee. 

ACH 

ATM 

BGN 

BIC 

CZK 

DKK 

ECB 

EPC 

EU 

EUR 

GBP 

HRK 

HUF 

Automatic Clearing Houses 

Automated Teller Machine 

Bulgarian lev 

Bank Identifier Code  

Czech koruna 

Danish krone 

European Central Bank 

European Payment Council 

European Union 

Euro 

British pound sterling 

Croatian kuna 

Hungarian forint 

IBAN 

International Bank Account Number 

IFR 

PLN 

Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on 
interchange fees for card-based payment transactions 

Polish złoty 

PSD / PSD2 

Directives 2007/64/EC and EU 2015/2366 on payment services in the internal market 

PSP 

PSU 

Payment Services Provider 

Payment Services Users (consumers, businesses, sending or receiving payments) 

Regulation 924  Regulation 924/2009 on cross-border payments in the Community 

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RON 

SEK 

SEPA 

STP 

TIPS 

USD 

Romanian leu 

Swedish krona 

Single Euro Payment Area 

Straight Through Processing 

Target Instant Payment Settlement 

United States dollar  

5 

 
 
 
 
 
1. 

INTRODUCTION 

Efficient  and  low-cost  payments  are  a  key enabler  of  the  Single  Market:  they  build 
trust  between  parties  and  facilitate  exchanges  across  borders  within  the  Single 
Market.  Cross-border  transactions  within  the  European  Union  (EU)  are  usually 
cheap in euro within the euro area but can remain dissuasively expensive when they 
are  sent  or  received  in  euro  outside  the  euro  area  or  when  they  involve  other 
currencies of Member States of the EU.  

Since the introduction of the euro, the European Union has launched various initiatives to 
achieve  a  significant  reduction  in  the  costs  of  cross-border  transactions,  such  as  through 
the  introduction  of  a  set  of  standards  for  euro  transactions  (SEPA  Credit  Transfers  and 
SEPA  Direct  Debits).  Additionally,  the  Payment  Services  Directives  increased  the 
transparency  of  fees  and  allowed  new  players  to  enter  the  market.  This  contributed  to 
enhanced  competition  in  payments,  including  across  borders,  and  increased  the 
transparency  of  fees.  This  also  resulted  in  improvements  in  the  payments  infrastructure, 
which became capable of handling increased payment volumes in euro at lower costs. 

Regulation  2560/2001,  later  replaced  by  Regulation  924/2009  on  cross-border  payments 
(hereafter  "Regulation 924"),  also  contributed  to  this  development  by equalising  fees  for 
cross-border and national payments in euro within the EU. As indicated in the first recital 
of  Regulation  924,  "for  the  proper  functioning  of  the  internal  market  and  in  order  to 
facilitate  cross-border  trade  within  the  Community,  it  is  essential  that  the  charges  for 
cross-border  payments  in  euro  are  the  same  as  for  corresponding  payments  within  a 
Member  State."  The  Regulation  covers  all  electronic  payments:  credit  transfers,  direct 
debits, card payments and cash withdrawals.  

All  these  initiatives  contributed  to  the  further  integration  of  the  Single  Market  and  the 
emergence of a more integrated payments market within the euro area. They have brought 
the fees for euro payments within the euro area to very low levels, in the vast majority 
of cases.  

However, cross-border euro payments originating from non-euro area countries as well as 
cross-border  non-euro  payments,  whatever  the  country  of  origin  or  destination,  have  not 
followed the same trend when it comes to the level of fees paid by payment services users. 
Payments involving currencies of EU Member States other than the euro are currently not 
covered by Regulation 924 although it does explicitly foresee the possibility for non-euro 
area Member States to extend the scope of the regulation to their currencies: 

  Under articles 3.1 and 14, the Regulation can be extended to local currencies other 
than the euro so that a cross-border transfer in a non-euro currency is priced as an 
equivalent  domestic  transfer  in  this  non-euro  currency  (e.g.  a  100  SEK  Swedish 
krona  transfer  from  Sweden  to  France  is  priced  as  a  100  SEK  Swedish  krona 
transfer within the country).  

  Under  article  3.3,  and  in  addition  to  the  previous  option,  the  Regulation  allows 
Member States to require that a cross-border transfer in euro is priced as a domestic 
transfer  in  a non-euro currency  (e.g. a 100 Euro transfer  from Czech  Republic to 
France  is  priced  as  an  equivalent  2500  CZK  Czech  koruna  transfer  within  the 
country – [currency exchange rate 1€ = 25 CZK]) – currency conversion costs are 
excluded). No Member State opted-in under this article.  

Sweden is the only Member State that applied the first option, and did so already in 2002 
(under  the  predecessor  Regulation  2560/2001),  extending  the  scope  of  application  of 

6 

 
 
 
Regulation 924 to its national currency. It reduced the prices of cross-border transactions 
in SEK, aligning them with prices for domestic transactions. An indirect effect in Sweden 
was that euro cross-border transaction fees were also aligned with domestic payments1.   

The European Commission Action Plan on Consumer Financial Services2, published on 23 
March 2017, stressed "that opaque and potentially excessive fees are a deterrent to cross-
border  transactions  within  the  EU,  particularly  when  they  involve  non-euro  currencies" 
and  announced  that  it  would  "propose  an  amendment  to  the  Regulation  on  cross-border 
payments  to  reduce  charges  for  cross-border  transactions  in  all  Member  States".  This 
action was supported by the feedback received during the Open Public Consultation on the 
Green Paper on retail financial services that was carried out between 10 December 2015 
and 18 March 2016 (14 weeks). The consultation sought views on how to improve choice, 
transparency  and  competition  in  retail  financial  services  for  the  benefit  of  European 
consumers and on how to facilitate cross-border provision of these services. The issue of 
cross-border payments was covered by two questions (#12 on cross-border payments and 
#13 on currency conversion). Question 12 was of particular relevance in the context of this 
Impact  Assessment:  "What  more  can  be  done  at  EU  level  to  tackle  the  problem  of 
excessive fees charged for cross-border payments (e.g. credit transfers) involving different 
currencies in the EU?" 

The  summary  of  responses  states  that  "on  the  specific  subject  of  cross-border  payments, 
most  consumers  agreed  in  their  answers  to  questions  on  cross-border  transaction  fees 
(Question  12)  […]  that  transparency  should  be  increased.  They  are  also  supportive  of 
extending Regulation (EC) 924/2009 (equalising the prices of domestic and cross-border 
transactions  in  euro)  to  all  currencies.  But  industry  and  some  national  authorities 
expressed confidence that the revised Payment Services Directive (2015/2366/EU) would 
bring  the  necessary  transparency  and  suggested  that  no  other  measures  should  be 
considered at this stage"3. In total, 265 answers were received for Question 12, 108 from 
private individuals, 16 from public authorities and 141 from organizations or companies.  

Closely  linked  to  the  initiative  to  address  the  excessive  fees  of  such  cross-border 
transactions between euro area Member States and non-euro area Member States was the 
second action of the Action Plan on Consumer Financial Services, which aimed to address 
the lack of transparency in currency conversion practices. The Action Plan considered that: 
"  Currency  conversion  rates  are  generally  not  transparent  for  consumers  when  paying 
with a card or a mobile device in a shop, or withdrawing money from a cash machine [and 
these]  rates  fluctuate  in  line  with  foreign  exchange  rates,  and  the  internal  bank  margin 
applied to currency conversion rates differs from bank to bank."  

Between  24  July  and  30  October  (14  weeks),  a  second,  more  specific  Open  Public 
Consultation entered into details regarding prices of cross-border transactions for payment 
services  users,  costs  for  payment  services  providers  and  available  options.  The  Open 
Public  Consultation  also  contained  several  questions  on  the  transparency  of  currency 
conversion,  and  consumers'  awareness  in  choosing  a  specific  option  of  currency 
conversion.  The  results  confirmed  those  of  the  first  consultation  and  provided  further 
useful  evidence  on  prices  paid  by  payment  services  users.  This  second  consultation 
attracted 141 answers. The synopsis of answers is provided in Annex 2.  

1 Since Sweden has opted-in for its local currency, and euro payment fees were also aligned, their data will 
be included in the euro Member State group in the calculations (market context and option analysis). 
2 COM(2017)139 final 
3 http://ec.europa.eu/finance/consultations/2015/retail-financial-services/docs/summary-of-responses_en.pdf 

7 

 
 
                                                            
Later in 2017, in its report on the Action Plan on Consumer Financial Services4 adopted on 
14  November,  the  European  Parliament  supported  the  extension  of  Regulation 
924/2009 recalling that fees for cross-border payments outside the euro area still remained 
high and called on the Commission to "rapidly propose an amendment to Regulation (EC) 
No  924/2009  of  the  European  Parliament  and  of  the  Council  of  16  September  2009  on 
cross-border payments in the Community and repealing Regulation (EC) No 2560/2001 in 
order to reduce charges for cross-border transactions in all Member States ". 

1.1. 

Policy context and scope of the initiative  

1.1.1.  Background 

What are cross-border transactions? 

Cross-border  transactions  are  understood  within  this  document  as  electronic  payment 
transactions  that  involve  two  Member  States  of  the  EU.  These  Member  States  may 
have the same currency (the euro) or different ones. The transaction can both be initiated 
in  a  euro  area  or  non-euro  area  Member  State  and  will  be  concluded  in  a  different  euro 
area or non-euro area Member State. The cross-border dimension is defined by the fact 
that the payer's account and the payee's account are located in two different Member 
States.  The  transaction  might  involve  a  currency  conversion  at  one  point  in  time  and 
would thus be cross-currency in addition to being cross-border. 

Which means of payments are covered? 

Regulation  924/2009  covers  cross-border  electronic  payment  transactions.  An  electronic 
transaction under this document means any payment which is processed electronically by 
the payment service provider. This includes the following means of payments: 

  Credit transfers which are transactions from a payer’s payment account to a payee's 
payment account, based on an instruction given by the payer to its payment service 
provider  (e.g. a German citizen sending a credit transfer to Malta);5 

  Direct  debits  which  are  transactions  initiated  by  the  payee  on  the  basis  of  the 

payer’s consent (e.g. a Belgian company debiting customers in France);6 

  Card  payments  which  are  transactions  by  means  of  any  card,  telecommunication, 
digital  or  IT  device  or  software  resulting  in  a  debit  or  a  credit  card  transaction 
based  on  a  payment  card  scheme's  infrastructure  and  business  rules  (e.g.  a 
Hungarian citizen using his payment card in France) ;7 and 

  Cash withdrawals – a withdrawal of banknotes by a payment service user from its 
payment  account  (e.g.  an  Estonian  citizen  withdrawing  CZK  notes  in  the  Czech 
Republic).8  

The legislative framework 

Cross-border  payments  are  covered  by  various  EU  laws  that  have  all  followed  the  same 
objective: creating the conditions for cheap, efficient and secure payments within the EU, 
as the backbone of the EU's internal market. A detailed description of relevant European 
legislation is provided in Annex 5. The main pieces of legislation are the following: 

4 2017/2066(INI) 
5 See art. 4, no. 24 PSD 2. 
6 See art. 2, no. 14 Regulation 924/2009. 
7 See art. 2, no. 7 Interchange Fee Regulation. 
8 For example making of a payment service as meant under Art. 4, point 3, Annex I sub 1 PSD 2. 

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  Regulations  2560/2001  and  924/2009  on  cross-border  payments  imposed  the 

equalisation of cross-border and domestic fees for euro payments.  

  The Single Euro Payments Area (SEPA) Regulation created a common and unique 

way to pay in euro across the EU. 

  The  Payment  Services  Directives  (PSD1  &  PSD2)  enhanced  competition  and 

security in payments. 

  The  Interchange  Fee  Regulation  regulated  excessive  hidden  interchange  fees  and 

put an end to competition in cards that drove up costs for consumers.  

1.1.2.  Market context 

Electronic transactions within the EU 

Cross-border  transactions  are  offered  by  payment  services  providers  defined  under 
article 1  of  the  Payment  Services  Directive9,  essentially  banks  and  other  payment 
institutions  such  as  e-money  institutions.  Banks  provide  current  accounts  to  their 
customers  (consumers,  enterprises)  that  are  linked  to  additional  services  such  as  the 
issuing  of  a  debit  or  credit  cards  and  the  capacity  to  make  and  receive  payments, 
domestically or cross-border. Payment institutions also provide these services.  

Based on the statistics provided by the European Central Bank10, the total number of non-
cash  payments  that  take  place  within  the  EU  is  about  120  billion  payments  a  year. 
Around  2/3  of  these  payments  are  in  the  euro  area,  and  1/3  outside  the  euro  area.  Card 
payments  (including  cash  withdrawals)  represent  around  half  of  the  total  number  of 
payment transactions, followed by credit transfers for  1/4 and direct debits for about  1/5 of 
this  total.  Cheques  still  account  for  a  small  share  of  the  total  number  of  payments  with 
2.5%, but they are not considered as electronic payments.  

The  total  value  of  payments  was  of  267.8  trillion  EUR  in  2016,  with  credit  transfers 
accounting for more than 98% of this total. 

Cross-border electronic transactions from EU Member States 

Cross-border electronic transactions account for a relatively small percentage of the 
number of electronic payments with about 7 billion transactions (around 6% of the 
total number of transactions) but represent quite large volumes with 35 trillion EUR 
(around 13% of the total values transacted). Details are provided in Annex 4.  

Cross-border transactions account for around 2% of the number of credit transfers, 9% of 
the number of card payments and 3% of the cash withdrawals. However, looking at values 
results  in  a  quite  different  picture:  up  to  28%  of  the  value  of  credit  transfers  in  Italy  is 
cross-border as well as 35% of the value of card payments with Bulgarian cards or 15% of 
the  value  of  cash  withdrawals  made  with  Swedish  cards.  In  the  case  of  credit  transfers, 
corporate payments may explain the relatively high values transferred per transaction. The 
high  minimum  costs  of  transactions  also  deter  small  cross-border  credit  transfers  so  that 
payment services users will only tend to transfer larger values.  

Overall,  cross-border  payments,  though  relatively  marginal  in  terms  of  number  of 
transactions are, in reality, hugely important within the EU economy, with relatively larger 
values transacted across borders, probably largely due to corporate payments. Among euro 

9  Directive  (EU)  2015/2366  of  the  European  Parliament  and  of  the  Council  of  25  November  2015  on 
payment services in the internal market 
10 http://sdw.ecb.europa.eu/reports.do?node=1000004051  

9 

 
 
                                                            
area  Member  States,  cross-border  transactions  account  for  about  1/4  of  the  total  values 
transacted. 

Such a discrepancy between the number of transactions and the values transacted does not 
exist  for  card  payments  and  cash  withdrawals  which  are  in  their  vast  majority  retail 
payments11.  Cross-border  card  payments  account  for  about  9%  of  the  number  of  card 
payments  (slightly  higher  in  non-euro  area  Member  States)  and  10%  and  14%  of  the 
transaction  values  for  euro  area  and  non-euro  area  Member  States  respectively.  Cross-
border  cash  withdrawals  make  up  for  about  to  2%  to  3%  of  both  the  number  of 
transactions  and  the  values  transacted.  One  exception  is  Sweden  where  the  use  of  cash 
(and hence cash withdrawals) has strongly decreased nationally; as a result,  cross-border 
volumes are very significant (8.66% of transactions) compared to domestic volumes.  

Electronic  payments  are  following  a  sustained  growth  trend  in  all  EU  Member  States. 
While the average growth in the number of domestic transactions was 16% between 2014 
and  2016,  cross-border  payments  grew  by  56%  over  the  same  period.  The  total  value  of 
domestic  transactions  rose  by  13%  between  2014  and  2016,  compared  to  an  increase  of 
23% for cross-border payments. 

In which currency do these cross-border transactions take place? 

It is important to understand in which currencies these cross-border transactions are carried 
out, and in particular how important transactions in EUR are compared to other currencies 
of Member States of the EU or other foreign currencies (USD, CHF and others) in order to 
grasp the potential impact of the initiative. Thus, this proposal deals with transactions that 
are currently not covered by the Regulation or remain expensive in spite of being covered, 
as in the case of euro transactions to and from non-euro Member States (Regulation 924 
requires them to be priced like domestic EUR transactions, but these remain expensive in 
non-euro  zone  countries).  Only  limited  detailed  official  statistics  exist  on  intra-EU 
transactions, while such data for extra-EU transactions is more easily available. However, 
various sources can be used to provide estimates. All details related to these estimates are 
included in Annex 4. Figures are extracted from ECB public databases.  

As Regulation 924/2009 is limited to intra-EU transactions in currencies of Member States 
of  the  EU,  our  estimates  of  cross-border  payments  in  the  EU  by  area  and  type  of 
transaction  –  in  volumes  (last  line  in  table  1  below)  limit  the  scope  of  this  analysis  to 
four  types  of  transactions:  cross-border  non-euro  transactions  from  euro  area  Member 
States and cross-border transactions from non-euro Member States in euro, local currency 
and other currencies of EU Member States. Overall, 44.09% of the cross-border payments 
in the EU are already covered by Regulation 924; these are the euro payments from euro 
area  Member  States.  The  remainder,  55.91%,  also  includes  extra-EU  transactions  (about 
10%), mostly in USD and CHF with the rest of the world. Within this second category, the 
scope that could be covered by Regulation 924 is composed of the remaining four types of 
transactions:  

  non-euro  intra-EU  cross-border  transactions  from  euro  Member  States  which 

account for 23.49% of the potential scope; 

  euro  intra-EU  cross-border  transactions  from  non-euro  Member  States  which 

account for 61.41% of the potential scope;  

11 Commercial cards would be an exception – their weight is marginal. 

10 

 
 
                                                            
 

local  currency  intra-EU  cross-border  transactions  from  non-euro  Member  States 
which account for 0.40% of the potential scope of transactions; and 

  other  EU  currencies  intra-EU  cross-border  transactions  from  non-euro  Member 

States which account for 14.70% of the potential scope of transactions. 

Table  1:  Cross-border  payments  in  the  EU  by  area  and  type  of  transaction  –  in 
volumes (full table in Annex 4 – source: ECB payment statistics)  

Cross-border payments in the EU by area and type of transaction 

Sent from 

Type of transaction 

Credit transfers 
(millions) 
Card payments 
(millions) 
Cash withdrawals 
(millions) 
Total transactions 
(millions) 
Share of the total 
number of 
transactions 
Share of the scope 
that could be 
covered by Reg 924 

19 euro area Member States + Sweden 
360 million citizens and 16,3 million enterprises 
Other EU 
currency intra 
EU 

Other 
currencies 
(USD, CHF…) 

Euro intra-EU 

8 non-euro area Member States 
150 million citizens and 6 million enterprises 

Euro 
intra-EU 

Local 
currency 
intra-EU  

Other EU 
currency 
intra EU  

Other 
currencies 
(USD, CHF…) 

302 

2333 

187 

2822 

60 

583 

47 

690 

40 

324 

26 

390 

149 

1555 

101 

1805 

12 

0 

0 

12 

18 

389 

25 

432 

20 

216 

14 

250 

44.09% 

10.79% 

6.10% 

28.20% 

0.19% 

6.75% 

3.90% 

Already 
covered 

23.49% 

Out of scope 

61.41% 

0.40% 

14.70% 

Out of scope 

Which  concrete  everyday  operations  are  covered  by  the  scope  of  cross-border 
transactions? Who is the most affected? 

Cross-border  payments  within  the  EU  represent  a  substantial  part  of  total  EU  payments 
and underpin the integration of the real EU economy. These transactions cover a limited 
number of use cases which are the following:  

  Consumer  cross-border  credit  transfers  (in  euro  or  in  local  currency,  sending  or 
receiving): EU consumers buying goods or services abroad or simply transferring 
money  to  other  people  (family,  friends)  may  use  credit  transfers  in  euro  (SEPA 
credit transfers) or other currencies of Member States of the EU to send or receive 
payments.  A  student  receiving  a  EUR  1000  monthly  allowance  from  his  family 
located outside the euro area to study in a euro area country would generate about 
EUR 100 per year of transactions fees that could strongly be reduced (to 0 or close) 
if cross-border and domestic fees were aligned. 

In addition, credit transfers have gained in popularity over the last three years with 
payment  services  providers launching  smartphone  applications  to  pay  friends  and 
relatives or even to pay merchants in some countries. These payment solutions are 
based on credit transfers, often using phone numbers linked to the IBAN numbers 
of the payment services users: Swish (SE), Jiffy (IT), Pumpkin (FR), PayM (UK), 
MobilePay  (DK)  are  among  the  most  prominent  ones.  These  solutions  typically 
facilitate domestic credit transfers, but efforts are underway, notably in the Mobile 

11 

 
 
 
 
Proxy Forum12, to  make  them interoperable at EU level. Lower cross-border  fees 
would further encourage their development.  

  Business  cross-border  credit  transfers  (in  euro  or  in  local  currency,  sending  or 
receiving): EU businesses of any size with cross-border links have to make cross-
border transfers to suppliers or receive money from clients located abroad, in their 
domestic  currency  or  in  a  currency  agreed  with  their  business  partners.  Payment 
services users particularly commented on this point in the open public consultation: 
"Our bank charges a 25 euros fee for all bank transfer in  euros  that we make to 
other EU countries. This is strongly affecting us when we implement cross-border 
Erasmus+  projects"  or  "After  years  of  living  in  Germany  I  returned  to  my 
hometown  in  Bulgaria  and  started  my  business  there.  My  business  partners  are 
located  in  other  EU  countries.  I  was  shocked  to  learn  there  are  excessive 
transaction  fees.  Even  in  private  matters:  depending  on  the  bank,  sometimes  you 
have to pay 10€ to transfer 10€." 

  Card  payments  and  cash  withdrawals:  EU  consumers  or  professionals  travelling 
across  the  EU  or  making  cross-border  e-commerce  purchases  will  also  most 
probably pay with their debit or credit cards (in euro or in the local currency of the 
merchant13) or withdraw cash (in the currency of the country where the withdrawal 
is  made)  in  order  to  pay  for  goods  and  services  in  the  country  where  they  are 
located. 

12 https://www.europeanpaymentscouncil.eu/news-insights/news/mobile-proxy-forum-latest-news  
13  Merchants  also  pay  a  fee  for  receiving  payments  (i.e.  the  acquiring  of  their  card  transactions)  called 
merchant service charge (MSC). However, due to the prominence of blending, i.e. charging the same MSC 
for  different  card  or  transaction  types  by  the  card  acquirer,  in  our  case  for  domestic  and  intra-EU  cross-
border  card  transactions,  the  Commission  did  not  consider  incoming  card  payments  in  its  calculation  of 
savings. 

12 

 
 
 
                                                            
2. 

PROBLEM DEFINITION 

Cross-border  payments  are  crucial  for  the  integration  of  the  EU  economy.  They  play  an 
important  role  in  bringing  together  citizens  and  enterprises  of  EU  Member  States. 
Restrictions and excessive costs affecting cross-border payments are an impediment to the 
completion of the Single Market.  

Overall, cross-border payments that are not done in euro and between euro Member States 
are subject to high fees that act as barriers to the further integration of the Single Market. 
These barriers particularly impact non-euro area Member States, creating two categories of 
payment services users in the EU: the vast majority who enjoy the benefits of the Single 
Euro Payments area and a minority living in comparatively small currency areas with high 
costs for all their cross-border transactions.   

The problem is not restricted to those living outside the euro area, as euro area citizens and 
enterprises will also face expensive fees for transacting cross-border in any other currency 
than the euro. Non-euro area citizens living in the euro area will also suffer from excessive 
costs when sending or receiving payments to or from their country of origin.  The problem 
is also not limited to the size of the payment service provider processing the transaction. 
Not only small banks that only process cross-border payments very occasionally, but also 
large banks that are most  likely to engage  in cross-border payments charge high fees,  as 
will be demonstrated throughout this impact assessment by figures extracted from the top 
three to seven banks in non-euro area countries. 

2.1. 

Problem description 

2.1.1.  Expensive fees for cross-border payments - a market analysis 

Cross-border  credit  transfers  from  euro  area  Member  States  towards  other  EU  Member 
States 

The fees for cross-border credit transfers in the EU will depend on the currency used for 
the transaction. In euro area countries, cross-border credit transfers in euro are most often 
free or close to free and aligned with domestic prices, as required by Regulation 924.  

Table 2: Min/max fees for making or receiving a EUR 10 credit transfer, cross-border 
and domestic, in euro in three EU Member States (Source: Deloitte study 2017 for EC) 

Member State 

France 

Italy 

EUR 10 credit transfer 

Min  Max 

Cross-border 
credit transfer 
Domestic 
credit transfer 

Incoming 
Outgoing 
Incoming 
Outgoing 

0 
0 
0 
0 

0 
0 
0 
0 

Min 
0 
First 36 free, then 2€ 
0 
First 36 free, then 2€ 

Max 
First 36 free, then 2.25€ 
First 6 free, then 4.50€ 
First 36 free, then 2.25€ 
First 6 free, then 4.50€ 

Germany 

Min  Max 
0.41 
0.05 
0.41 
0.05 

0 
0 
0 
0 

As  soon  as  another  currency  than  the  EUR  is  used  for  such  transfers,  fees  become  very 
costly as illustrated below, both for sending and receiving funds.  

13 

 
 
 
 
 
Table  3:  Min/max  fees  for  making  or  receiving  a  cross-border  EUR  10  equivalent 
credit  transfer  in  another  currency  of  Member  States  of  the  EU  (Source:  Deloitte 
study 2017 for EC) 

Member State 

France 

Germany 

Equivalent EUR 10 credit transfer in 
other EU currency 

Min (€) 

Max (€) 

Min (€) 

Max (€) 

Cross-border credit 
transfer 

Incoming 
Outgoing 

0 
9 

19.05 
24.50 

0 
5 

5.50 
12.50 

Cross-border credit transfers from non-euro area Member States 

With the exception of euro transactions within the euro area, cross-border transaction costs 
are still an important impediment to the Single Market. Credit transfer fees, in particular, 
are  a  significant  cost  factor  for  enterprises  and  citizens  in  Europe.  Many  Europeans  – 
especially  in  Member  States  outside  the  euro  area  –  face  very  high  fees  whenever  their 
funds  are  transferred  outside  the  country  or  when  they  receive  funds  from  another  EU 
Member State14. These fees are especially disproportionate for transfers of low values.  

The  fees  paid  by  payment  services  users  for  initiating  cross-border  credit  transfers  of 
values between EUR 10 and EUR 1000 are illustrated in tables 4 and 5 below. They reflect 
the minimum and maximum fees of the least and most expensive banks for each country. 
There  are  only  minor  differences  between  transactions  in  EUR  and  transactions  in  non-
euro currencies.  

Tables 4 and 5: min/max fees for cross-border transfers in local currency and euro. 
(How to read the table: for a transfer with an amount of between EUR 10 and EUR 1000, 
a  Bulgarian  citizen  is  likely  to  pay  between  EUR  15  and  EUR  24  of  transaction  fees) 
(Source: Deloitte study 2017 for the EC) 

Member State 

Fees in EUR 

Bulgaria 
Croatia 
Czech Republic 
Denmark 
Hungary 
Poland 
Romania 
Sweden 
UK 

Cross-border transfer in local 
currency (transfers of EUR 10 
to EUR 1000 equivalent) 

Min 
15.00 
4.05 
8.44 
2.69 
4.62 
4.74 
9.86 
0 
0 

Max 
24.03 
10.80 
11.51 
6.72 
12.38 
9.48 
19.73 
0 
17.05 

Member State 

Fees in EUR 

Bulgaria 
Croatia 
Czech Republic 
Denmark 
Hungary 
Poland 
Romania 
Sweden 
UK 

Cross-border transfer in 
euro (transfers of EUR 10 
to EUR 1000) 

Min 
15.00 
4.05 
7.48 
2.69 
4.62 
1.19 
9.86 
0 
4.55 

Max 
24.03 
10.80 
9.59 
6.72 
12.38 
1.90 
14.90 
0 
11.37 

As shown before, the same transfers in euro from and to any major bank of the euro area 
have, for several years already, been free or close to free (see figure 1 below).  

Figure 1: The evolution of the cost of sending EUR 100 cross-border in the euro area, 
in EUR (Source – EC study accompanying PSD215) 

14  This  is  confirmed  by  the  first  results  of  the  Open  Public  Consultation  where  2/3  of  the  respondents 
indicated that cross-border transaction costs were either expensive (21%) or very expensive (44%). 
15

 See p.48, figure extracted from p.56; study published on the following website: 

http://ec.europa.eu/internal_market/payments/docs/framework/130724_study-impact-psd_en.pdf.       

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                            
  
Receiving payments may also be costly for payment services users in some non-euro area 
Member States, albeit not to the same extent as sending payments. The fees for receiving 
payments  are  also  covered  by  Regulation  924:  the  fees  for  receiving  cross-border 
transactions  in  euro  should  be  aligned  with  fees  for  receiving  equivalent  transactions 
domestically  in  euro.  As  presented  under  Table  6,  receiving  fees  are  much  lower  than 
sending fees and in all Member States but two. Taking also into account that receiving fees 
are only relevant for credit transfers16, in order to streamline this analysis, these costs will 
not be described at length and will be considered as amounting to about 10% of the fees 
for sending credit transfers. 

Table  6:  Fees  in  EUR  for  incoming  cross-border  credit  transfers  of  EUR  10  or 
equivalent (denominated in euro, local currency or any other currency of EU Member 
States – Source: Deloitte study 2017 for EC). 

Member State 

Bulgaria 

Czech 
Republic 

Denmark 

Poland 

Sweden 

UK 

EUR 10 or equivalent 
incoming credit transfer 

Incoming Euro 

Incoming local currency 

Incoming other EU 
currency 

Min  Max  Min  Max  Min  Max  Min  Max  Min  Max  Min  Max 

0 

0 

0 

0 

1.53 

3.84 

3.84 

7.67 

1.34  2.69 

8.63 

2.69  6.72 

1.53 

3.84 

11.51  2.69  6.72 

0 

0 

0 

1.19 

2.61 

0 

0 

0 

0 

2.61  3.15  6.29 

0 

0 

0 

1.14 

6.82 

6.82 

Regulation  924  also  applies  to  euro  payments  in  non-euro  countries,  but  euro  payments 
remain expensive within these countries and hence also across borders17, even though the 
payment  services  providers  in  non-euro  area  countries  have  full  access  to  clearing  and 
settlement  infrastructures  in  euro  and  thus  face  the  same  low  costs  as  payment  service 
providers  in  euro  area  countries.  Yet,  there  have  been  very  few  signs  of  significant  fee 
reductions  for  this  type  of  transactions  outside  the  euro  area.  The  Commission  already 
analysed  the  effects  of  Regulation  924  on  the  market  in  2012  covering  also  non-euro 
Member States18. While the two studies were not done by the same contractor and did not 
look at the exact same payment services providers, the figures can still be used to compare 

16 As described in footnote 13, merchants also pay a fee for receiving card payments, but there is no evidence 
of substantial price differences between domestic and cross-border transactions, hence the Commission did 
not consider incoming card payments in its calculation of savings. 
17 The exception to this is Sweden, where it is free.  
18 http://ec.europa.eu/internal_market/payments/docs/framework/130724_study-impact-psd_en.pdf.       

15 

 
 
 
 
                                                            
the  average  cost  of  a  transaction  in  2012  and  2017  and  analyse  how  the  market  evolved 
without  regulatory  intervention.  There  have  not  been  any  significant  reductions  in  fees, 
with  the  exception  of  maybe  Hungary  and  Poland,  although  the  current  fees  still 
significantly exceed the typical fees in the euro zone, even in those two countries.  

Table  7:  average  fee  for  a  cross-border  EUR  100  equivalent  transaction  between 
2012  and  2017  (Sources  Deloitte  study  2017  for  the  EC,  London  Economics  and 
PaySys study 2013 for EC) 

Average fee for a cross-border EUR 100 equivalent 
transfer in local currency 

Year 

Bulgaria 

Croatia 

Czech Republic 

Denmark 

Hungary 

Poland 

Romania 

Sweden 

UK 

2012 

18,68 € 

N/A 

9,50 € 

2,17 € 

15,32 € 

2,73 € 

12,58 € 

0 € 

15,63 € 

2017 

19,98 € 

8,23 € 

8,71 € 

2,69 € 

5,93 € 

1,54 € 

11,19 € 

0 € 

9,26 € 

Cross-border card payments and cash withdrawals from euro area Member States 

Cross-border card payments  and cash withdrawals  from euro area  Member States  follow 
the same logic as credit transfers. In most cases they will be free of charge in euro, within 
or outside the borders of the country. However, as soon as the transaction becomes cross-
currency, fees will apply, in particular for cash withdrawals.  

Table  8:  min/max  fees  for  cross-border  card  payments  and  cash  withdrawals  from 
three euro area Member States in euro and other currency of Member States of the 
EU (Source: Deloitte study 2017 for EC) 

Member State 

Transaction 

Card payment 

Cash 
withdrawal 

Non-euro cross-border 
Euro cross-border 
Domestic 
Non-euro cross-border 

Euro cross-border 

Domestic at ATM group 

Domestic at other ATM 

France 

Italy 

Min 
0.25 
0 
0 
0.43 
First 4 free 
then 1€ 
0 
First 4 free 
then 1€ 

Max 
1.19 
0 
0 
3.29 
First 3 free 
then 1€ 
0 
First 3 free 
then 1€ 

Min 
0.10 
0 
0 

Max 
0.20 
0 
0 

First 12 free 
then 2€ 
0 
First 12 free 
then 2€ 

First 12 free 
then 2.10€ 
0 
First 12 free 
then 2.10€ 

Germany 

Min  Max 
1.50 
0 
0 
6.13 

1 
0 
0 
4.75 

0 

0 

0 

5.99 

0 

5.98 

Card payments and cash withdrawals from non-euro area Member States 

The same observations as for credit transfers from non-euro area Member States apply to 
card payments and cash withdrawals, although the fee difference between  euro and non-
euro transactions, domestic and cross-border, is smaller, especially for card payments.  

16 

 
 
 
 
 
 
Table 9: Fees charged to consumers for paying by card and withdrawing EUR 10 (or 
equivalent) in another EU MS for countries of the EU which do not have the euro as a 
currency. (Source: Deloitte study 2017 for EC) 

Member State 

Bulgaria 

Croatia 

Czech 
Republic 

Denmark 

Poland 

Romania 

UK 

EUR 10 or equivalent 
card payment 
Euro or other currency 
(cross-border) 
Local currency (domestic) 

Min  Max  Min  Max  Min  Max  Min  Max  Min  Max  Min  Max  Min  Max 

0 

0 

0.04 

0 

0 

0 

4.10 

0.20 

0 

0 

0 

0 

0.01  0.15  0.28  2.37 

0 

0.02 

0 

0 

0 

0 

0.20  0.20  1.98 

0 

0 

0 

Member State 

Bulgaria 

Croatia 

Czech 
Republic 

Denmark 

Poland 

Romania 

UK 

EUR 10 or equivalent 
cash withdrawal 
Euro or other currency 
(cross-border) 

Local 
currency 
(domestic) 

At ATM 
group 
At other 
ATM 

2.14  2.66 

0 

0.15 

2 

0 

Min  Max  Min  Max  Min  Max  Min  Max  Min  Max  Min  Max  Min  Max 

3.47  3.80  4.79  4.03  NA 

0.30  2.37  2.51  14.9  0.27  2.55 

0.45  0.61  1.41  2.70  1.15  1.53  1.08  1.34 

0 

0 

0.19 

0 

0 

0 

0 

0 

0 

1 

1.19 

0.6 

3.29 

0 

0 

0 

0 

For card payments, the same transactions will usually be free within the country (with only 
two exceptions noted where the card payments are charged to the consumer at 2 eurocents 
and  20  eurocents  respectively).  In  many  non-euro  area  Member  States,  there  are  some 
banks  on  the  market  that  do  not  charge  any  additional  fee  for  cross-border  transactions. 
Differences between domestic and cross-border fees are generally small. 

For cash withdrawals, the comparison of fees should be done with fees for cash withdrawn 
at  ATMs  that  do  not  belong  to  the  PSP's  group.  Fees  are  usually  multiplied  by  three  as 
soon  as  a  border  is  crossed.  The  range  of  fees  varies  widely  as  some  banks  will  charge 
nothing  or  a  very  small  fee  (e.g.  6  eurocents)  for  cash  withdrawals  abroad,  while  others 
can charge up to 15 euros for the same transaction.  

2.1.2.  Two categories of payment services users in the EU 

When  it  comes  to  fees  for  cross-border  payments,  Regulation  924  brought  major 
improvements to euro area residents, but not to non-euro area residents. 

On the one hand, there are 350 million European citizens in the euro area who benefit from 
intra-EU  cross-border  payments  that  are  priced  exactly  at  the  same  level  as  domestic 
payments,  in  the  currency  of  their  country.  As  an  example,  a  France  -  Finland  euro 
transaction is priced exactly as a France - France euro transaction, and in the vast majority 
of  cases  studied  –  credit  transfer,  card  payment  or  cash  withdrawal  –  the  transaction  is 
free19. Euro area citizens are not limited to the euro area for those payments in euro. They 
can also send euro to non-euro area countries at the same cost: it is the receiver who will 
be paying a fee for receiving a cross-border transfer.  

On the other hand, 160 million Europeans outside the euro area are scattered across 
monetary  islands  separated  by  very  high  charges  for  cross-border  payments  ––  to 
which  a  margin  on  currency  conversion  has  to  be  added.  A  Bulgaria  -  Finland  credit 

19 Deloitte 2017 study for EC 

17 

 
 
 
  
 
                                                            
transfer  transaction  of  the  equivalent  of  500  euros  in  BGN  is  not  priced  the  same  as  an 
identical Bulgaria - Bulgaria transaction: it can cost up to 24 euro cross-border, and only 
one euro for the domestic transaction. In addition to this, currency conversion margins of 
the payment services providers will apply.  

This  difference  between  euro  and  non-euro  Member  States  means  that  consumers  or 
companies  of  the  euro  area  can  transact  (send  and  receive)  with  350  million  people  and 
15.7  million  enterprises  at  no  or  very  low  cost.  They  can  also  transact  with  160  million 
additional people and 6.5 million enterprises in euro only at no or very low costs on their 
side  (costs  will  be  on  the  receiving  side).  The  only  case  where  they  will  not  be  able  to 
transact  at  low  cost  with  these  non-euro  area  stakeholders  is  when  the  transaction  is 
denominated in another currency which, as illustrated in table 1, rarely happens. 

By  contrast,  the  160  million  Europeans  and  6.5  million  enterprises  outside  the  euro area 
will only be able to transact within their Member State at similarly low costs as those 
borne by euro area citizens or enterprises. Crossing a border will increase the price of any 
transaction, whether the transaction takes place in the local currency, in euro or any other 
currency of EU Member States. In addition, receiving a transaction from abroad will also 
incur a cost, sometimes even when the transaction is received in the local currency.  

In  a  hypothetical  non-euro  Member  State  with  19  million  inhabitants  (the  average 
population  of  non-euro  Member  States),  citizens  and  businesses  would  be  able  to  reach 
almost 20 times fewer partners with low-cost payments than if they resided in a euro area 
Member State20. The exception is Sweden where consumers and companies can enjoy low-
cost domestic and cross-border payments towards the euro area, allowing them to reach a 
total of 360 million citizens and 16.3 million enterprises.  

2.1.3.  Restrictions  to  the  Single  Market:  use  cases  that  would  benefit  from 

reduced prices for cross-border transaction and volumes  

Offering residents and businesses in non-euro area countries the same low costs for cross-
border transactions as can be observed in euro area countries would overcome a significant 
obstacle  to  the  full  integration  into  the  Single  Market  of  non-euro  area  residents  and 
businesses.  Use  cases  that  would  benefit  from  reduced  prices  for  cross-border  payments 
with their corresponding volumes and values (detailed in Annex 4) are presented below.   

Cross-border credit transfers from consumers (in euro or in local currency): buying a good 
or service abroad and paying with a credit transfer is, in the vast majority of cases, not a 
good  option  for  non-euro  area  residents  as  the  cost  of  the  transfer  will  be  prohibitive. 
While a EUR 100 SEPA credit transfer will hardly cost anything when done by a euro area 
resident, the average non-euro area consumer would have to pay fees of around EUR 8 and 
up to EUR 20 in the most expensive countries.  

Cross-border credit transfers from enterprises (in euro or in local currency): whereas larger 
enterprises  will  be  able  to  negotiate  the  prices  of  cross-border  transfers  with  their  banks 
through "cash management" agreements, small- and medium-sized enterprises (SMEs) and 
sole traders will face significant costs when paying their cross-border suppliers and when 
receiving payments from abroad.  

The  available  statistics  do  not  differentiate  between  retail  payments  (consumer, 
SMEs)  and  corporate  payments.  Overall,  the  volume  at  stake  for  intra-EU  cross-
border credit transfer from consumers and enterprises (in euro or in local currency – 

20 350 million / 19 million = 18.4. 

18 

 
 
                                                            
euro  area  to  euro  area  excluded)  is  of  17,390  billion  euros  and  239  million 
transactions. 

Card  payments  and  cash  withdrawals  will  also  result  in  additional  costs  when  made  in 
another EU Member State. Although the additional costs for card payments may be rather 
limited,  the  cost  of  withdrawing  cash  abroad  can  be  significantly  higher  for  non-euro 
country cardholders, putting them at a disadvantage compared to euro area card holders. 

Card  payments  and  cash  withdrawals  amount  to  2.7  billion  transactions, 
representing  a  volume  of  149  billion  euros  a  year  (131  billion  euros  for  card 
payments, 18 billion euros for cash withdrawals). 

The  previous  use  cases  all  concern  citizens  and  enterprises  from  non-euro  area  Member 
States21. Euro area residents and enterprises would also gain from lower cross-border 
transaction costs, to the extent that they transact with counterparts in non-euro area 
countries  and  in  non-euro  currencies.  In  such  cases,  they  face  high  transaction  costs 
whenever  they  make  or  receive  a  payment  from  non-euro  Member  States  in  another 
currency  than  the  euro.  Lifting  these  restrictions  could  allow  euro  area  Member  State 
residents  and  enterprises  to  reach  an  additional  160  million  Europeans  and  6.5  million 
enterprises with low-cost payments.  The total number of transactions covered by this 
use  case  would  then  be  690  million  transactions  (60  million  credit  transfers,  583 
million card payments and 47 million cash withdrawals) for a total value of 2.6 billion 
euros (figures already included under first and second use cases). 

2.1.4.  Views of payment services users 

Overall,  payment  services  users  consider  that  cross-border  payment  transactions  in 
currencies  other  than  the  euro,  or  in  euro  from  non-euro  countries,  are  expensive  or 
very expensive. More details are provided in Annex 2. 

The  opinion  of  payment  services  users  on  the  price  of  cross-border  payments  was 
confirmed  by  the  public  consultation  held  between  30  July  and  30  October.  It  attracted 
about  150  answers.  Nearly  80%  of  individuals  and  67%  of  companies  classified  cross-
border  transaction  in  local  currency  as  expensive  or  very  expensive  (percentages  of 
respondents who expressed an opinion). For cross-border payments in euro from non-euro 
Member  States,  nearly  70%  of  individuals  and  56%  of  companies  classified  these 
transactions as expensive or very expensive. 

These  figures  are  confirmed  by  the  results  of  a  survey  contracted  by  the  European 
Commission.22  Regarding  cross-border  transactions,  about  92%  of  respondents  are 
dissatisfied with the costs of cross-border transactions. Only 8% indicated that this practice 
has never been the subject of complaints. Respondents further indicated that the following 
situations  occur,  either  occasionally  or  frequently:  ‘lack  of  transparency  of  the  actual 
payment  fees  for  cross-border  transactions’  (77%),  ‘expensive  costs  to  withdraw  money 
abroad’ (73%), ‘being obliged to pay a fee for payment transactions within the European 
Union’  (69%),  ‘expensive  costs  to  transfer  credit  abroad’  (64%)  and  ‘expensive  costs  to 
make  card  payments  abroad’  (64%).  Overall,  according  to  the  respondents,  consumers 
complain more often (either occasionally or frequently) about practices in relation to their 

21  Figures  presented  throughout  this  impact  assessment  always  include  UK  cross-border  transactions  that 
represent a substantial share of non-euro area countries’ cross-border transactions (about 80%). This issue is 
further discussed in Chapter 8. 
22 Special Eurobarometer survey carried out by the TNS Opinion & Social network in the 28 Member States 
of the EU between 9 and 18 April 2016. 27.969 EU citizens were interviewed face-to-face at home. 

19 

 
 
                                                            
cross-border transactions as compared to domestic transactions. The survey also aimed at 
gathering feedback directly from consumers and representatives of PSU associations on an 
extension of Regulation 924/2009. Overall, 60% of respondents were in favour of this.   

Citizens were questioned on their perceptions of fees charged for transactions in or to EU 
Member States where other currencies are used. 62% of respondents who had made one of 
these transactions agreed the information on fees charged is transparent. 64% respondents 
who  had  made  one  of  these  transactions  considered  that  the  fees  charged  for  such 
transactions were too high.  

2.1.5. 

Summary 

Fees  for  cross-border  transactions,  sent  from,  or  received  in,  non-euro  Member 
States, or sent in a non-euro Member State currency have remained excessively high. 
This creates barriers to the Single Market resulting in a divided EU when it comes to 
cross-border payments. For currencies other than EUR, the high costs appear to be 
due  to  lower  volumes  and  a  lack  of  modern  infrastructures,  as  well  as  weak 
competitive  and  regulatory  pressure  on  payment  services  providers  to  adapt  to  the 
payment needs of consumers and enterprises in the Single Market (see next section).   

2.2.  What are the problem drivers? 

The  problem  of  high  transaction  fees  results  from  various  drivers,  some  of  which  are 
outside the scope of the current exercise. First of all, they reflect the fragmentation of the 
retail  banking markets with  competition problems, particularly in  non-euro area Member 
States,  which  continue  to  rely  on  legacy  infrastructures  for  cross-border  payments. 
Although EU legislation has led to increased competition over the last 10 years, the effects 
on prices have not been the same in all Member States. 

Cross-border transaction volumes are small compared to domestic payments – also likely 
to be the result of the high fees. Low volumes make investments in modern cross-border 
payments infrastructures less profitable, keeping internal costs high for payment services 
providers.  Non-euro  area  Member  States  appear  to  be  caught  in  a  high-cost  trap.  The 
evidence presented in the Impact Assessment covers the top three to seven largest payment 
services  providers  in  each  non-euro  area  country.  These  are  the  banks  with  the  highest 
volumes of cross-border payments and the highest number of clients making them.  They 
are also likely to be the banks most active in transactions involving foreign currencies (in 
particular  the  euro)  -  some  of  them  being  subsidiaries  of  euro  area  banks.    Hence,  the 
problem  is  rather  universal  and  not  confined  to  banks  and  clients  with  low  volumes  of 
cross-border payments. 

Considering the problem drivers within the scope of the current exercise, the infrastructure 
for cross-border payments is one of the main issues. Euro payments benefit from a single 
standard  across  the  EU  (SEPA  standard)  and  a  centralised  infrastructure  to  achieve  EU-
wide  reachability.  This  modern  infrastructure  and  the  SEPA  standards  are  a  direct 
consequence  of  Regulation  924/2009  and  its  predecessor  Regulation  2560/2001,  which 
aligned  the  fees  that  banks  could  charge  to  their  clients  for  domestic  and  cross-border 
payments in euro. This alignment reduced the revenues of banks, which in turn invested to 
reduce  their  costs  of  processing  cross-border  transactions.  This  euro  infrastructure  has 
been modernised over time (Target 2, Step 2 from EBA Clearing) and developments are 
still ongoing, notably with the future Target Instant Payment Settlement (TIPS) system of 
the  European  Central  Bank.  At  the  same  time,  a  major  market  failure  exists  for  cross-

20 

 
 
 
border payments in other currencies as BGN, GBP, HRK, CZK, DKK, HUF, PLN, RON 
or  SEK  have  no  central  EU  infrastructure  and  standardised  format.  Instead,  they  rely  on 
various  intermediaries,  such  as  correspondent  banks,  typically  one  per  currency  for  each 
payment service provider. Correspondent banking processes (executed mostly through the 
SWIFT  network)  are  relatively  slow,  expensive  and  had  basically  been  unchanged  for 
decades. 

A  regulatory  failure  can  also  be  identified:  the  decision  taken  in  2009  not  to  apply 
Regulation 924 to non-euro currencies (also to make joining the euro area more attractive) 
resulted in a lesser degree of modernisation of infrastructures for cross-border transactions 
in non-euro countries.  

While the absence of regulatory pressure might not be considered as a problem driver in 
itself, a recent study from McKinsey points out the regulators' role in resolving this issue: 
"As  cross-border  payments  did  not  face  the  same  regulatory  and  competitive  pressure, 
banks  have  had  little  incentive  to  innovate  structurally  on  customer  offerings,  back-end 
systems and processes. And as cross-border payments revenue margins remained healthy 
and  price  erosion  moderated,  no  structural  cost-reducing  processes  were  introduced 
across  the  industry.  As  a  result,  operational  cost  per  transaction  for  international 
payments continues to average well above $20 (these costs vary widely across institutions 
and  between  cross-border  corridors)."  […]  The  opportunity  is  significant.  Banks  can 
aspire  to  a  future  with  new  revenues  from  additional  services  and  where  the  operating 
cost of  a cross-border payment drops to between  $1 and $3,  with full transparency  and 
execution  in  less  than  15  seconds23".  The  importance  of  regulatory  pressure  was  also 
highlighted  in  the  last  CapGemini  World  Payments  Report  2017  which  noted  that 
"regulatory  initiatives  were  identified  by  bank  executives  as  the  top  driver  of  structural 
changes (for 65% of bank executives) 24."  

Regulation 924 did not create the regulatory pressure that would have reduced the costs of 
cross-border  transactions  in  all  countries,  even  though  it  does  also  apply  to  euro 
transactions  in  non-euro  countries.  The  voluntary  opt-in  foreseen  in  Regulation  924  was 
only  used  by Sweden.  Thus, while  Regulation 924 was very effective at overcoming  the 
divide  between  countries  in  the  Euro  area  when  it  comes  to  fees  for  cross-border 
payments, it did little to overcome the remaining deep divide between euro area countries 
and  the  rest  of  the  EU,  and  among  non-euro  countries.  The  2012  evaluation  of  the 
implementation of Regulation 924/2009 concluded that extending the Regulation to other 
currencies  of  Member  States  of  the  EU  (see  Annex  6)  would  be  beneficial  to  payment 
services  users  but  should  be  left  to  the  decision  of  Member  States.  Making  this  option 
mandatory is studied under Options 1 and 2 of this impact assessment. Other ways to solve 
the problem described earlier are also proposed under Options 3 and 4. 

Finally,  another  market failure comes  from  pricelists  for  cross-border  transactions which 
today  are  long  and  complex,  differentiating  incoming  and  outgoing,  domestic  and  cross-
border  transactions,  often  sub-divided  by  currencies  (local,  euro,  other  currencies  of  the 
EU, other currencies), with categories for credit transfers, direct debits, card payments and 
cash  withdrawals.  This  complexity  reduces  the  comparability  and  transparency  of  cross-
border transactions and weakens competition. 

The problem drivers, issues and consequences are presented below in Figure 2.  

23  McKinsey  Global  Payment  Map  2016.  Available  at:  https://www.mckinsey.com/industries/financial-services/our-
insights/a-mixed-year-for-the-global-payments-industry  
24 Capgemini World Payment Report 2017. Available at: https://www.worldpaymentsreport.com/download  

21 

 
 
                                                            
Figure 2: problem tree related to cross-border payments 

2.3.  How will the problem evolve? 

It  is  to  be  expected  that  high  cross-border  payment  costs  will  remain  a  barrier  between 
non-euro Member States and the rest of the EU. The problem would disappear if non-euro 
countries adopted the common currency (enlargement of the Euro area), or if they decided 
voluntarily  to  comply  with  Regulation  924  as  permitted  through  opt-in  solutions. 
However, there are no indications that this would happen fast, so legislative action seems 
justified.  

The market could also bring a solution, and there are already new FinTech players offering 
cross-border  payment  services  and  bringing  some  competition  to  the  market  in  the  long 
run: as an example, TransferWise and PayPal both offer low-cost cross-border payments 
through  credit  transfer  or  online  card  payments.  However,  two  obstacles  will  remain: 
TransferWise and PayPal do not allow consumers to make ATM withdrawals or pay in a 
shop with a payment card (PayPal is exclusively used online). Most importantly, they are 
not  universally  used  payment  service  providers:  TransferWise's  market  share  is  very 
limited (0.0003% of all EU credit transfers) and the company is mostly known by Internet-
savvy users. PayPal's market share is bigger (up to 25% of online payments in the UK – 
no information on cross-border/domestic market shares) but it is a closed-loop provider. In 
order to be paid through PayPal, a user needs to have a PayPal account which limits the 
reachability of the service. So far, there is little evidence, though, that this competition has 
resulted in banks lowering their charges. 

This could change somewhat in the years ahead, should more consumers decide to make 
use  of  these  FinTech  services,  but  this  process  could  take  a  long  time  as  these  FinTech 
providers  are  currently,  and  are  likely  to  remain,  niche  players  typically  used  only  by 
consumers  who  are  both  financially  and  IT  literate.  As  a  consequence,  the  competition 
brought by these new players will not be sufficient to fully address the issue in the short to 
medium term. 

22 

Non-euro cross-border transactions in all EU countriesEuro cross-border transactions in 8 non-euro EU countriesCONTEXT (Out of scope)Regulation 924 does not cover non-euro EU countries for euro transactions, only Sweden opted-inNo commitment to join the euro in several Member StatesLow volumes of cross-border transactions relative to domestic transactions.Weak competitive pressure in the cross-border payments market, including from FinTechsProblem 1:High fees for non-euro cross-border transactions in all countries of the EUProblem 2:High fees for euro cross-border transactions in 8 non-euro countriesTwo-tier society between non-euro country consumers and businesses and the rest of the EUDEMAND SIDE: Low transparency (complexity) of pricing reduces competitive pressureSUPPLY SIDE: Lack of incentives (e.g. no competitive pressure on revenues) for PSPs to invest in cross-border payment infrastructure resulting in:1. Antiquated systems/infrastructure, intermediaries such as correspondent bankingand2. Non-harmonized, non-efficient, expensive processes leading to high costs for PSPsProblem driversProblemsRestriction of cross-border exchanges for consumers (travelling, shopping, sending money abroad) and corporates (export, import) when fees are highBarrier to the Single MarketConsequences 
 
 
 
In  the  absence  of  EU  initiatives  promoting  the  setting  up  of  a  cross-currency 
infrastructure25 that would encompass all currencies of EU Member States  and allow for 
lower internal cost, it is to be expected that payment services users will have to wait for a 
long time before they can benefit from lower fees. The high costs faced by the banks today 
will  persist  and  may  even  increase  as  security  costs  and  maintenance  costs  of  ageing 
infrastructures go up.  

2.4.  A two-speed market based on a two-speed infrastructure 

The  capacity  of  payment  services  providers  to  provide  efficient  cross-border  payment 
services  is  strongly  related  to  the  availability  of  clearing  and  settlement  infrastructure  in 
the case of credit transfers. On the one hand, euro payments benefit from standards such as 
SEPA  Credit  Transfer,  SEPA  Direct  Debits  and  the  very  recent  SEPA  Instant  Credit 
transfers  with  EU-wide  clearing  and  settlement  infrastructures  (EBA  Clearing  and 
Target2) that allow any bank of the EU to reach any other bank of the EU for payments in 
euro.  The  costs  of  these  infrastructures  are  known  and  are  very  low  (e.g.  less  than  EUR 
0.01 per transaction for euro transactions, independent from volumes). Further information 
on infrastructures is provided in Annex 4.  

Scenario 1 – Credit transfer - Payment processing in euro 

On  the  other  hand,  non-euro  transfers  are  not  harmonised  (no  common  standard  for 
payments  in  SEK,  BGN,  PLN,  HUF  etc.,  no  EU-wide  clearing  and  settlement 
infrastructure in currencies other than the euro, manual processes, intermediaries such as 
correspondent  banks).  In  particular,  the  use  of  correspondent  banking  is  costly.  Deloitte 
estimated that internal costs of these transactions are 30 to 40 times higher than those of 
euro  transactions26.  It  should  be  noted  that  there  is  currently  no  EU  wide  initiative  that 
would bring new infrastructure on the market to reduce the internal cost of these payments 
for  banks  (the  only  approaching  initiative  is  TIPS  which  includes  a  multi-currency 
functionality but which may not be used before 2020/2021). There is also no initiative to 
agree on a single standard similar to SEPA standards for non-euro credit transfers. 

Scenario 2 – Credit transfer - Payment processing in other currencies than the euro 

25 One initiative could be mentioned, though: the ECB’s future clearing and settlement mechanism for instant 
payments. This initiative called TIPS (Target Instant Payment Settlement) will support euro instant payments 
(SCT instant) and will be launched in November 2018. Its impact on non-euro cross-border transactions and 
non-instant  euro  transactions is still  unknown, but it  will  be  designed  to handle  multiple  currencies. It  has 
already been  decided  that  instant  SEPA  credit  transfers  will  be  cleared  and  settled  by  the  ECB  during  the 
first two years for 0.20 euro cents (EUR 0.002) without any other additional cost. 
26 Deloitte study for EC - 2017 

23 

Initiator of the paymentBank of theinitiatorClearing House(Target 2)Beneficiary of the paymentBank of the beneficiaryInitiator of the paymentBank of theinitiatorClearing HouseBeneficiary of the paymentBank of the beneficiaryCorrespondent bank 
 
 
 
 
 
                                                            
Card  payments  and  cash  withdrawals  are  different  insofar  as  they  already  benefit  from 
infrastructures for all currencies provided by international card schemes to process cross-
border transactions. In addition, in most non-euro area Member States, local schemes have 
disappeared and been replaced by international schemes (e.g. Maestro, a MasterCard brand 
or VPay by Visa).  More details are provided in Annex 4.  

2.5.  Why  have  Member  States  used  or  not-used  the  opt-ins  of  Regulation 

924/2009? 

The  two  opt-ins  of  Regulation  924  both  imply  the  equalisation  of  fees  for  cross-border 
transactions in local currency with domestic payments – a restriction to euro cross-border 
payments only (as proposed later in this document under Option 3) was not foreseen.  

Sweden used the local currency opt-in and justified it as benefiting the Swedish integration 
in the European Union and pushing Swedish banks to develop payment functions that are 
competitive  (namely  that  are  more  automated/efficient,  thus  benefiting  consumers  and 
SME businesses - see the presentation of the Swedish case in Annex 4). However, no other 
non-euro Member State implemented the opt-ins.  

Indeed, the cost that such an opt-in would impose on payment service providers would be 
high, in view of the major difference  in costs for domestic and cross-border payments at 
least  when  it  comes  to  non-euro  transactions.  Offering  cross-border  local  currency 
payments  at  the  same  price  as  domestic  payments  would  most  probably  bring  losses  to 
payment  services  providers.  They  indeed  made  their  opposition  to  the  opt-in  foreseen  in 
Regulation 924 very clear in their responses to the open public consultation, and it is likely 
that  they  would  seek  to  dissuade  national  governments  envisaging  an  opt-in.  National 
governments  may  also  fear  that  payment  services  providers  forced  to  align  cross-border 
transaction  prices  with  domestic  transaction  prices  might  raise  the  prices  of  domestic 
transactions to recoup the losses they would incur on costly cross-border transactions.   

For  this  reason,  this  Impact  Assessment  will  analyse  other  options  that  could  provide  a 
solution to expensive fees while avoiding the need to offer cross-border transactions at a 
loss. This would indeed be possible for euro transactions to and from non-euro countries. 

2.6.  What is not covered under this Impact Assessment? 

Currency conversion costs 

Currency  conversion  costs  are  excluded  from  the  scope  of  Regulation  924/2009  under 
article 3.4 and do not constitute a part of the fee charged for a transaction  – even though 
they  come  as  an  additional  cost  for  the  user.  In  addition,  dynamic  currency  conversion 
costs are in particular imposed by merchants' technical or payment services providers and 
not  payers'  payments  services  providers  which  Regulation  924/2009  covers.  These 
currency conversion charges, however, are regulated under the Payment Services Directive 
in order to bring transparency to the practice and to allow the payer to make an informed 
choice. Under its Title III  - already in  force and maintained in the revised Directive that 
applies  as  from  January  2018  –  it  imposes  a  certain  degree  of  transparency  on  payment 
services  providers  as  regards  the  relevant  conditions  and  information  requirements.  In 
particular, article 37 of PSD requires that payment services users be informed of: 

  "all charges payable by the payment service user to his payment service provider 

and, where applicable, the breakdown of the amounts of any charges" 

24 

 
 
  
  and "where applicable, the actual or reference exchange rate to be applied to the 

payment transaction." 

Among  the  possible  reactions  of  payment  services  providers  confronted  with  reduced 
transaction  fee  revenues  following  any  legislative  intervention  in  this  domain,  those 
aiming  to  compensate  their  losses  could  choose  to  recoup  losses  of  revenues  through 
currency conversion charges, which are usually not transparent to consumers even though 
they  are  covered  by  the  Payment  Services  Directive  (as  described  above).  Possible 
counter-measures  should  address  this  issue.  As  described  in  Chapter  8  of  this  analysis, 
more  detailed  transparency  requirements  would  make  the  existing  currency  conversion 
requirements as defined under the Payment Services Directive more effective. 

Direct debits 

Direct debit transactions are also not covered under this impact assessment. This type of 
transaction is covered by Regulation 924 but, in view of the volumes at stake27 (they are 
not  offered  by  all  banks  in  the  EU,  especially  not  outside  the  euro  area  and  there  is 
currently no cross-border direct debit between non-euro area Member States and euro area 
Member States) they will not be analysed.  

The special case of remittances 

People working abroad and sending money back to their families in their home country on 
a  regular  basis  may  not  use  electronic  payments  to  do  so.  Instead  they  typically  turn  to 
companies  that  operate  cash-to-cash  payments  such  as  MoneyGram  or  Western  Union. 
Remitters may use this type of services for lack of cheap bank alternatives or because they 
do not have access to bank accounts. Though not covered by Regulation 924, reliance on 
such  cash-to-cash  remittances  may  decline  as  a  result  of  reduced  prices  for  cross-border 
transactions  and  cheap  bank  alternatives.  Thanks  to  the  Payments  Account  Directive, 
which  guarantees  the  right  to  a  basic  bank  account  for  all  EU  citizens,  intra-EU 
remittances could be shifted to the traditional banking environment. According to Eurostat 
figures, such remittances amount to about 12 billion euro a year. 

2.7.  Limits to the Impact Assessment 

This  Impact  Assessment  is  based  on  a  wide  range  of  data  gathered  through  previous 
studies conducted by the European Commission in relation to Regulation 2560/2001 and 
Regulation  924/2009  as  well  as  the  second  Payment  Services  Directive,  through  a  study 
conducted in 2017 to analyse the fees charged to payment services users for cross-border 
payments  and  the  internal  costs  of  banks  for  the  same  transactions,  two  Open  Public 
Consultations enriched by payment services users’ examples of fees, and payment services 
providers explanations on cost differences as well as publicly available payment statistics 
from  the  ECB  and  Eurostat.  A  major  limitation  is  the  lack  of  data  on  cross-border 
exchanges  among  non-euro  area  Member  States.  This  Impact  Assessment  uses  estimates 
whenever public data are not available or reliable (see details in Annex 4).  

27  For  instance,  in  France  in  2016  there  were  6  million  cross-border  direct  debits,  while  there  were  71.3 
million credit transfers and 562 million card payments.  

25 

 
 
 
 
 
 
 
                                                            
3.  WHY SHOULD THE EU ACT? 

3.1.  Legal basis 

The Treaty on the Functioning of the European Union confers to the European institutions 
the  competence  to  lay  down  appropriate  provisions  that  have  as  their  objective  the 
establishment and functioning of the internal market (Article 114 TFEU).  

Payments are an enabler of the Single Market which encompasses the free movement of 
goods, persons, services and capital. High cross-border payment costs are creating barriers 
to  the  Single  Market  -  effective  barriers  to  cross-border  activities  of  households  (buying 
goods/services in another currency zone) and enterprises (using suppliers located abroad, 
reaching clients in another currency zone) that restrict their access to the Single Market by 
imposing additional costs on their transactions - and should be addressed as an obstacle to 
the  free  movement  of  goods,  persons,  services  and  capital.  High  costs  of  cross-border 
payments also create two categories of payment services users, those in the euro-area who 
are able to reach, with their payments, a majority of EU citizens and businesses at very low 
costs, and those in non-euro countries who can only reach a small number of people and 
businesses with low-cost payments. 

To  address  these  two  concerns,  legislative  action  at  EU  level  is  the  most  effective 
response, and it is in line with the objectives of the Treaties.  

3.2. 

Subsidiarity: Necessity of EU action 

Member  States  were  given  the  option  to  extend  Regulation  2560/2001  and  its  successor 
Regulation 924/2009 to their national currencies already about 17 years ago. To date, only 
Sweden made use of this option and the consequences were clear: prices of cross-border 
payments  in  Swedish  krona  from  Sweden  are  aligned  with  domestic  payments  (in  fact, 
though  not  mandated  by  the  Regulation,  they  are  free).  This  option  also  impacted  euro 
payments that are also free in Sweden28. 

As other Member States failed to follow Sweden’s lead (see Chapter 2.5 on reasons why 
they have not used opt-ins), there are now two categories of citizens and enterprises when 
it comes to cross-border payments: those covered by EU legislation benefiting from low-
cost  cross-border  transactions  fees  and  the  others.  The  political  decision  not  to  include 
non-euro currencies within the scope of the Regulation 924/2009 was seen as an incentive 
for  these  countries  to  join  the  euro  area  as  quickly  as  possible.  However  this  has  only 
partially materialized and there is currently no movement towards the adoption of the euro 
in sight from non-euro area Member States. 

For the proper functioning of the Single Market and in order to further integrate national 
markets, to facilitate exchanges across borders and to put an end to the two-tier situation, it 
is  essential  that  charges  for  cross-border  payments  are  brought  down  to  the  level  of  
charges for national payments. This reduction of fees can efficiently be achieved through 
an extension of Regulation 924/2009 as further discussed in the next chapters. 

28 Though Sweden did not notify the European Commission that it would use the second opt-in (equalisation 
of fees for cross-border euro transactions) but only the first opt-in (equalisation of fees for cross-border SEK 
transactions), market players actually implemented the second (euro) opt-in.  

26 

 
 
 
                                                            
The status quo will maintain this de facto divide, slow down economic integration and the 
deepening of the Single Market. By contrast, a regulatory push that would reduce the cost 
of cross-border payments would allow for a better integration of the Single Market.  

An  EU  initiative  would  also  be  an  important  political  signal  and  represent  a  tangible 
measure to the benefit of citizens and enterprises, similar to the roaming regulation in the 
telecom sector.  

3.3. 

Subsidiarity: Added value of EU action 

Member States could have taken action on their own but have not done so over the past 17 
years,  apart  from  Sweden.  Cross-border  payments  are  not  everyday  transactions  for  EU 
citizens and may not trigger as many complaints as other core banking services would, if 
priced excessively, so Member States did not have strong incentives to act on their own. 

Individual  actions  by  one  or  the  other  Member  State  would  decrease  the  discrepancy 
between EU citizens and enterprises that benefit from low-cost cross-border payments and 
the EU citizens and enterprises that do not. For this reason, tackling the problem by acting 
at  EU  level  is  preferable  to  leaving  it  to  individual  Member  States  or  the  market,  which 
does not guarantee swift progress and the full coverage of the EU. Such action at EU level 
would  generate  economies  of  scale  (increasing  the  volume  of  cross-border  transactions, 
leading  to  enhanced  efficiency  in  the  payments  infrastructure);  it  would  increase  the 
volume of intra-EU cross-border trade, stimulate competition and further deepen the EU's 
economic integration.  

Non-regulatory tools 

Market  players  could  also  have  taken  action  and  envisaged  self-regulation.  However, 
revenues deriving from cross-border payments are significant and the status quo is the best 
guarantee  to  maintain  revenues.  Non-regulatory  measures  would  not  be  putting  enough 
pressure on payment services providers to offer services at prices that reflect their internal 
costs, particularly with regard to euro payments. 

27 

 
 
 
 
 
4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

4.1.  General objective 

The  general  objective  of  EU  action  in  the  domain  of  cross-border  payments  is  to  reduce 
the  fees  for  cross-border  payments  across  the  EU  and  thus  to  contribute  to  a  better 
integration of all EU citizens and businesses into the EU economy. This general objective 
addresses  the  main  issue  of  high  fees  for  cross-border  transactions  from  non-euro  area 
countries and in addition, focuses on all issues of market failure (fees imposed on payment 
services  users  do  not  reflect  the  real  cost),  regulatory  failure  (the  lack  of  effect  of 
Regulation  924/2009  on  cross-border  transaction  fees  in  non-euro  area  countries)  and 
equity/discrimination concerns (cross-border fees for non-euro area payment services users 
not aligned with euro area users' fees). 

4.2. 

Specific objectives 

This general objective translates into various specific objectives that all correspond to one 
or several problem drivers. EU action to reduce the fees of cross-border payments should 
seek to: 

  Cover the broadest possible range of transactions and payment services users. 
Covering  the  broadest  possible  range  of  transactions  ensures  that  the  measure  is 
most  effective  in  terms  of  reach  and  supports  equity  between  non-euro  area  and 
euro  area  payment  services  users.  Any  reduction  of  fees  should  benefit  the 
maximum  number  of  people  and  enterprises  by  covering  the  largest  share  of 
transactions (in number and value of transactions).  

  Increase the  transparency of  fees in cross-border  transactions.   The objective 
of  increased  transparency  derives  from  the  alignment  of  the  fees  of  cross-border 
transactions  in  euro  with  domestic  ones,  which  are  usually  fees  that  payment 
services users know very well. This will have an impact on the level of competition 
by  making  fees  more  transparent  and  comparable  between  providers  (resolving  a 
market failure). 

  Push  all  EU  payment  services  providers  towards  a  modernisation  of  cross-
border payments services. Any action on fees should ensure that lower fees will 
be  the  result  of  lower  costs  and  hence  increased  efficiency  in  providing  cross-
border payment services, as happened in the case of euro transactions in the 2000's, 
rather  than  cross-subsidisation  of  such  services  using  increased  revenues  from 
domestic payments or currency conversion services.  

  Equal  access  to  low-cost  payments  for  euro  area  and  non-euro  area  citizens 
and  enterprises.  Finally,  reducing  fees,  in  addition  to  benefiting  the  broadest 
possible  range  of  stakeholders,  should  also  bring  more  equality  of  opportunities 
among citizens and, for enterprises, a level-playing field.  

28 

 
 
  
  
 
 
 
 
Figure 3: How do general and specific objectives answer the problem and problem drivers 
identified in the problem tree?

29 

 
 
 
 
 
 
5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

This section will present five policy options related to the above objectives. The baseline 
scenario  consists  of  the  current  status  quo  (i.e.  no  further  action).  A  soft-law  option 
(recommendation,  voluntary  initiatives)  is  not  considered  separately,  as  it  is  already 
contained  in  the  current  Regulation  924.  Four  additional  options  differ  in  terms  of  the 
scope of currencies/transactions covered. The following options will be analysed: 

  Baseline: Do nothing; 
  Option 1: Extending Regulation 924 to local currencies cross-border transactions; 
  Option  2:  Extending  Regulation  924  to  local  currencies  and  euro  cross-border 

transactions; 

  Option 3: Extending Regulation 924 only to euro cross-border transactions; 
  Option  4:  Extending  Regulation  924  to  all  cross-border  transactions  in  currencies  of 

Member States of the EU. 

In  all  cases,  addressees  of  all  options  will  be  payment  services  providers.  Depending  on 
the option retained, payment services providers would need to be given more or less time 
to adapt to the new rules.  

Options  1  and  2  are  presented  in  this  order  as  these  two  options  are  already  included  as 
"opt-ins" in Regulation 924 under article 3.1 and 3.3. Option 3 is a variation of Option 2 
that can be described as "Option 2 without Option 1". Option 4 is the most ambitious one 
and  would  eliminate  all  differences  between  transactions  within  a  Member  State  and 
across borders, regardless of the currency used. 

Why are all options related to fees for domestic transactions? 

All  options  are  based  on  an  extension  of  Regulation  924  which  uses  fees  charged  by 
payment  services  providers  for  domestic  payments  as  a  benchmark.  Depending  on  the 
option,  the  extension  of  Regulation  924  will  equalise  domestic  transaction  fees  and  fees 
for: cross-border transactions in local currency (option 1); local currency and euro (option 
2); euro only (option 3); or all currencies of the EU (option 4).  

This method of aligning cross-border fees with domestic transaction fees takes account of 
the level of development and efficiency of local payment systems and banks (infrastructure 
and processes). Indeed, production costs are not the same from one country to another, and 
in  some  non-euro  countries  even  domestic  transactions  can  cost  up  to  one  euro.  Using 
domestic transactions fees  as a benchmark allows taking into  account the specificities of 
each  country  and  their  payment  services  providers.  In  view  of  this,  it  did  not  seem 
appropriate to consider an alternative approach consisting in setting a maximum price for 
cross-border  transactions  for  all  EU  countries  (as  was  done  with  the  Interchange  Fees 
Regulation).  

5.1.  The Baseline scenario – Do nothing 

The  baseline  scenario  consists  in  taking  no  further  action  at  EU  level.  Fees  for  cross-
border  transactions  will  continue  to  be  left  to  the  market  and  regulatory  interventions  of 
individual Member States, implying no disruption of the status quo and no new  costs on 
any of the stakeholders covered by Regulation 924. The current growth trends observed on 

30 

 
 
 
 
the  market29  will  continue  bringing  even  more  revenues  to  payment  services  providers. 
However, it is unlikely that this growth would continue at the same rate. Member States 
would  remain  free  to  opt  in  and  bring  the  benefits  of  reduced  fees  for  cross-border 
payments to their citizens and businesses. Excessive prices would offer lucrative business 
opportunities for new market players who may be able to capture a part of the market by 
proposing  competitive  pricing  compared  to  incumbents.  While  the  situation  might 
eventually improve under the baseline scenario, it will take a long time before significant 
progress  towards  the  objectives  will  be  achieved,  as  there  have  been  very  few  signs  of 
significant reductions in fees over recent years in spite of the arrival of FinTech providers 
offering cheaper ways of transferring funds across the EU. 

5.2.  Option  1:  Extending  Regulation  924  to  local  currencies  cross-border 

transactions 

Option  1  would  consist  in  a  legislative  proposal  equalising fees  for  domestic  and  cross-
border non-euro national currency transactions, making one of the two opt-ins foreseen in 
Regulation 924 mandatory. The addressees would be payment services providers and the 
horizon  to  comply  could  be  two  years  from  the  date  of  entry  into  force  of  the 
instrument. These two years would be necessary for payment services providers to adapt 
to a change of legislation that would impose on them to provide a rather costly service at 
the price of a low-cost service. These two years should grant them sufficient time to think 
the question through and adapt their business processes to a changed situation.  

5.3.  Option 2 – Extending Regulation 924 to local currencies and euro cross-

border transactions 

Option 2 encompasses option 1 and adds a requirement to also equalise fees for cross-
border  transactions  in  euro  with  domestic  transaction  fees.  For  instance,  making  a 
CZK transfer from Prague to Paris or a EUR transfer from Prague to Paris would be priced 
by a PSP like a CZK transfer from Prague to Prague. This option is already in Regulation 
924 under article 3.3. Option 2 would in effect make this opt-in mandatory. The addressees 
would be payment services providers and the horizon to comply would be two years for 
non-euro  transactions  and  six  months  for  euro  transactions  from  the  date  of  entry 
into  force  of  the  instrument.  The  shorter  period  of  six  months  for  euro  transactions 
would be justified by the fact that a common infrastructure for euro transactions is already 
available  also  to  PSPs  in  non-euro  countries,  allowing  a  quasi-immediate  alignment  of 
fees.   

5.4.  Option  3  –  Extending  Regulation  924  only  to  euro  cross-border 

transactions 

Option 3 differs from Options 1 and 2 as it would require the equalisation of fees for 
domestic transactions in the national currency and cross-border transactions only for 

29 Overall non-pondered average growth, all means of payments together (credit transfer, direct debits, card 
payments and cash withdrawals) in 12 Member States (9 non-euro area Member Sates + FR, IT, GE) of 56% 
in number of cross-border electronic payments between 2014 and 2016 (the two years together) – Source: 
ECB payment statistics 

31 

 
 
 
 
 
                                                            
euro  cross-border  transactions.  For  instance,  making  a  EUR  transfer  from  Prague  to 
Paris would be priced by a PSP as a CZK transfer from Prague to Prague. This option is 
equivalent  to  making  article  3.3  of  Regulation  924  mandatory  while  article  3.1  would 
remain  a  voluntary  option  (i.e.  equalising  the  costs  of  domestic  and  cross-border 
transactions  in  the  national  currency).  The  addressees  would  be  payment  services 
providers and the time  horizon to  comply  could be  six months  from the  date  of entry 
into force of the instrument. 

5.5.  Option  4  –  Extending  Regulation  924  to  all  cross-border  transactions  in 

currencies of Member States of the EU. 

Finally, Option 4 consists in removing all internal borders for transactions in any EU 
currency.  It  would  require  PSPs  to  align  their  fees  for  all  cross-border  transactions 
between EU countries in whatever EU currency with domestic transactions, even for 
transactions in currencies that are not the ones of the sending or receiving country. 
Currency conversion costs would still apply when the currency used is not available to the 
payer. For instance, in addition to Option 2, making a CZK or HUF transfer from Paris to 
Prague would be priced as a EUR transfer from Paris to Prague equal to a EUR transfer 
from Paris to Paris. The addressees would be payment services providers and the horizon 
to  comply  could  be  four  years  for  non-euro  transactions  and  six  months  for  euro 
transactions  from  the  date  of  entry  into  force  of  the  instrument.  A  full  change  in 
market infrastructures to clear and settle efficiently and at low costs transactions across the 
EU30 justifies the four years. 

Table 10: Synthesis of each option's characteristics 

Options 

Baseline 

Option 1 

Option 2 

Option 3 

Option 4 

Transactions 
issued from 

Scope of 
transactions 

Time horizon 
for 
improvements 

N/A 

Non-euro MS 

Non-euro MS 

Non-euro MS 

All MS 

N/A 

Local currency 
cross-border 
transactions 

Local currency and 
euro cross-border 
transactions 

Euro cross-
border 
transactions 

Long 

2 years 

6 months euro 
2 years local currency 

6 months 

All cross-border 
transactions in a 
currency of a EU MS 
6 months euro 
2 years local currency 
4 years other currencies 

5.6.  Option discarded at an early stage 

Capping the cost of cross-border transfers at 3% in line with the UN Global Sustainable 
Development Goals for remittances. 

On 1 January 2016, the United Nation's 17 Sustainable Development Goals (SDGs) of the 
2030 Agenda for Sustainable Development officially came into force31. The EU has played 
an  important  role  in  shaping  the  2030  Agenda.  Among  the  SDGs,  goal  #10  calls  for 
reduced inequality within and among countries and sets notably the following target: "By 
2030,  reduce  to  less  than  3  per  cent  the  transaction  costs  of  migrant  remittances  and 
eliminate remittance corridors with costs higher than 5 per cent".  

This  option  was  discarded  at  an  early  stage,  considering  that  a  3%  maximum  would 
already  constitute  a  relatively  expensive  fee  for  cross-border  transactions  within  the  EU, 

30  As  it  took  four  years  for  non-euro  area  MS  to  adopt  SEPA  payments  (from  2012  to  2016),  the  same 
transition period is proposed for all Member States to move to new standards for all payments in the EU. 
31 http://www.un.org/sustainabledevelopment/sustainable-development-goals/  

32 

 
 
 
                                                            
except for small value transactions. In addition, fixing a smaller percentage maximum (e.g. 
0.1%  or  1%)  that  fits  all  EU  Member  States  is  not  possible  as  production/internal  costs 
vary from one country to the other. Finding a common benchmark / reference for all EU 
Member States on which to align prices was also not feasible as conditions differ from one 
country to the other.  

Additional alternatives were also studied (as witnessed in the Open Public Consultation) in 
order to further improve the capacity of achieving the objectives. An online fee-calculator 
for instance could help in very specific cases when the fee is expressed as a percentage of 
the  amount  of  a  transaction  and  requires  calculation.  However,  it  would  be  far  less 
efficient  than  the  alignment  of  domestic  and  cross-border  fees:  the  utility  of  such 
calculators can be questioned when at an ATM or in a merchant shop at the point of sale. 
Payment  services  users  are  often  faced  with  time  pressured  environments  in  such  cases, 
and access to technology or internet would be required. 

33 

 
 
 
6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

This  section  assesses  the  effectiveness  and  efficiency  of  the  proposed  options  both  at 
aggregate  level  and  by  relevant  stakeholder  groups:  payment  services  users  (consumers 
and enterprises), payment services providers and supervisors. It will assess the benefits of 
both  direct  and  indirect  nature,  qualitatively  and  quantitatively,  against  the  general  and 
specific objectives outlined in chapter 4.  

The  different  options  will  be  assessed  with  respect  to  the  general  objectives  of  lifting 
barriers to the Single Market and putting an end to the internal discrepancy with regard to 
cross-border payments by comparing them with the baseline scenario and positioning them 
in  relation  to  the  maximum  benefits  and  costs  that  can  be  expected  from  having  cross-
border payment fees aligned with fees for domestic payments. The benefits and costs will 
be  rated,  for  each  specific  objective,  from  ---  to  +++,  with  ---  representing  the  lowest 
rating  against  the  baseline  (e.g.  high  costs  of  implementation)  and  +++  the  maximum 
rating (e.g. maximum scope of transactions covered). 

This allows assessing the options in terms of (1) how effective they are in achieving the 
objectives;  (2)  how  efficient  they  are  in  view  of  the  costs  they  imply;  (3)  how  coherent 
they  are  with  broader  EU  policies  (here  mainly  the  Monetary  Union,  the  Single  Market 
and  the  general  legal  EU  framework  for  payments);  and  (4)  how  they  affect  key 
stakeholders,  namely  payment  services  users  (including  citizens,  SMEs  and  companies), 
payment services providers and supervisors.  

The  preferred  policy  option  should  ensure  the  best  possible  attainment  of  the  stated 
objectives,  while  at  the  same  time  imposing  the  lowest  costs  and  the  best  impacts  on 
stakeholders while being coherent with broader EU policy objectives. 

Table 11: Linking objectives with associated benefits 

Problems and consequences 

Objective 

Direct regulatory benefits 

General problem 
Barriers to the Single Market and 
two-tier society for cross-border 
payments 

General objective 
Lift remaining barriers to the Single Market 
due to cross-border payments and provide 
a level-playing field across the EU 

Specific objective 1: reduce the fees of 
cross-border payments for all 

Specific problem 1: expensive 
cross-border payments 

Specific objective 2: increase the 
transparency of cross-border payments  

Specific objective 3: modernised payment 
systems 

Specific problem 2: major fee 
differences between euro area 
and non-euro area MS 

Specific objective 4: reduce differences 
between euro area and non-euro area 
citizens & enterprises 

  Number of transactions covered 

by a fee reduction 

  Number of PSUs and enterprises 

covered by a fee reduction  

  Total savings for PSUs 

  Level of transparency of fees 

brought by the equalisation of 
fees 

  Incentives for PSPs to move 

towards modernised 
infrastructures 

  Cost savings due to modernised 

infrastructures 

  Reachability offered by low cost 

cross-border payments 

34 

 
 
 
 
The  cost  analysis  will  build  on  the  expected  consequences  of  reaching  the  objectives 
presented  above  and  will  look  at  the  various  regulatory/administrative  one-off  and 
recurring costs that could arise for stakeholders. 

Table 12: Linking objectives with associated costs 

Objectives 

Costs 

Specific objective 1: reduce the 
fees of cross-border payments for 
all 

  Substantive compliance costs for PSPs (Revenue losses - recurrent) 

  Indirect costs for PSUs (Increased domestic fees – recurrent) 

  Enforcement costs for supervisors (one-off and recurrent) 

Specific objective 2: increase the 
transparency of cross-border 
payments  

Specific objective 3: modernised 
payment systems 

Specific objective 4: reduce 
differences between euro area 
and non-euro area citizens & 
enterprises 

  Administrative costs for PSPs (fee documentation - one-off) 

  Enforcement costs (recurrent) 

  Indirect cost (IT costs for PSPs (one-off, recurrent)) 

  No measurable cost 

6.1.  Overview of potential benefits and costs 

6.1.1.  Potential benefits 

Specific objective 1: reduce the fees of cross-border payments for all 

  The maximum benefit would be achieved if all intra-EU cross-border transactions 

from or to euro area Member States in a currency that is not the euro are covered, as 
well as all cross-border transactions from or to non-euro area Member States, in 
euro, local currency or other currencies of Member States of the EU32. Details are 
provided in Annex 4.  

o  For credit transfers,  these figures amount to  178 million transactions worth 
EUR 14  749  billion  initiated  in  non-euro  area  Member  States,  in  euro  or 
local currency and 60 million transactions worth EUR 2 642 billion initiated 
in euro Member States. The grand total is 239 million transactions worth 
EUR 17 391 billion. 

o  For card payments, the maximum number of transactions to cover would be 
2 527 million transactions worth EUR 131 billion divided in 1944 million 
transactions from non-euro area Member States worth EUR 105 billion and 
583 billion transactions worth EUR 26 billion from euro Member States.  

o  Finally about 173 million cash withdrawals took place in 2016 with a total 
value  of  EUR 18  billion  of  which  126  million  transactions  amounting  to 
EUR 11  billion  are  made  by  non-euro  area  cardholders,  and  47  million 
transactions for EUR 7 billion by euro Member State cardholders. 

32 Data for Sweden is consistently added to the data for euro Member States, as Sweden already opted-in for 
Regulation 924. 

35 

 
 
 
 
 
 
                                                            
Table 13: Volumes of cross-border payments broken down by area of origin 

Cross-border payments in the EU by area and type of transaction 

Sent from 

Type of transaction 

Credit transfers (millions) 

Card payments (millions) 

Cash withdrawals (millions) 

Total transactions (millions) 

Share of the scope that could 
be covered by Reg 924 

19 euro area Member States + 
Sweden 
360 million citizens and 16,3 
million enterprises 

8 non-euro area Member States 
150 million citizens and 6 million 
enterprises 

60 

583 

47 

690 

23.49% 

178 

1944 

126 

2248 

76.51% 

  The greatest benefits for PSUs would occur if all EU citizens and enterprises could 
make  cross-border  transactions  at  the  same  price  as  they  make  domestic 
transactions. The maximum number of  PSUs (consumers and enterprises) that 
could be covered is 510 million citizens and 22.2 million enterprises. 

  The maximum overall savings for PSUs are estimated at EUR 1.48 billion/year. 
This  is  a  static  estimate  which  disregards  changes  in  behaviour,  such  as  people 
switching from moving cash across borders to electronic payments or using money 
remittance  services.  Such  dynamic  effects  would  tend  to  increase  the  savings,  but 
they are impossible to  estimate due  to  a lack of data. The savings estimate is  thus 
based on the following assumptions:  

o  The average cost of a retail (consumers, SMEs) cross-border credit transfer 
varies  between  EUR  1.54  in  Poland  and  EUR  20  in  Bulgaria.  The  same 
national  transaction  would  be  priced  from  EUR  0  to  EUR  2.13.  Although 
there  are  fees  payable  also  for  receiving  cross-border  credit  transfers 
(sometimes  even  when  the  cross-border  transfer  is  received  in  local 
currency),  this  cost  has  been  ignored  in  this  estimate  as  it  is  marginal 
compared to the sending fee; also, in most countries, there are providers that 
do not charge at reception. It also needs to be taken into consideration that 
many corporates already benefit from negotiated prices and as such may not 
benefit  from  fee  reductions.  The  savings  estimate  therefore  excludes 
corporate payments, estimated to make up for 90% of all cross-border credit 
transfers33. This results in a reduction of the number of transactions from 239 
million transactions to 24 million transactions (retaining only about 10% of 
the  total  number  of  transactions  for  retail  payments).  A  weighted  average 
price for cross-border transactions in non-euro Member States was estimated 
at EUR 8, based on the volumes by country and the fees applied in non-euro 
Member  States34.  The  same  transaction,  domestically,  is  priced  at  an 
estimated  EUR 1,  so  reducing  fees  to  the  level  that  applies  to  domestic 

33 There is no official data on the part of cross-border credit transfers that belong to corporates vs retail users. 
This figure is purely indicative and for calculation/information purposes based on exchanges with payment 
services  providers.  However,  considering  the  average  value  of  credit  transfers  cross-border  from  non-euro 
area Member States (> EUR 15000), it is assumed that corporates make most of the volumes. 
34 Average prices are known for all countries based on top 3 to 5 providers, volumes were estimated for CZ, 
DK, UK and PO. 

36 

 
 
 
 
 
 
                                                            
transactions  would  lead  to  a  EUR 7  saving  per  transaction.  Total  savings 
would  then  amount  to  at  least  EUR  167  million/year.  In  addition,  a  10% 
mark-up  (17  million)  should  be  taken  into  account  to  cover  receiving  fees 
bringing the total to EUR 184 million/year. 

o  A  similar  calculation  is  done  for  all  cross-border  card  payments  and  cash 
withdrawals. The share of corporates in such cross-border card transactions 
is small, so they have not been excluded from the calculation. 

  The  total  potential  savings  for  card  payments  are  estimated  at 
EUR 1.01  billion/year  with  a  EUR 0.40  average  fee35  for  cross-
border  card  payments  going  down  to  EUR 0.00  on  2.5  billion 
transactions.  

  The  total  potential  savings  for  cash  withdrawals  are  estimated  at 
EUR 289 million/year with a EUR 2.30 average fee for cross-border 
cash  withdrawals  going  down 
to  EUR 0.63  on  173  million 
transactions.  

Table  14:  Summary  of  potential  savings  (EUR  millions)  by  category  of  transaction 
(the last line indicates which options allow to capture these savings) 

Potential savings* by category of transaction 

Sent from 

From € MS in non-
euro currency 

From non-€ MS 

In euro 

In local currency 

In other EU currency 

Credit transfers 

Card payments 

Cash withdrawals 

Total savings 

46 

233.2 

79.9 

359.1 

% of total savings 

24.13% 

114.3 

622 

171.7 

908 

61% 

9.2 

N/A 

N/A 

9.2 

0.61% 

Options 
associated 

Option 4 

Options 2, 3, 4 

Options 1, 2, 4 

13.7 

155.6 

42.5 

211.8 

14.23% 

Option 4 

The average saving per transactions is calculated at EUR 7 per credit transfer, EUR 0.40 
per card payment and EUR 1.7 per cash withdrawal. Nevertheless, it should be clear that 
users  in  some  Member  States  will  benefit  more  than  others  –  those  where  fees  per 
transactions are  very  high such  as in Bulgaria will see a bigger impact than those where 
fees are already low such as in Poland.  

Specific objective 2: increase the transparency of cross-border payments 

The  transparency  for  payments  could  be  maximised  if  there  were  a  single  individual  fee 
for  all  transactions  independent  of  the  currency  used,  the  country  where  it  is  sent  to  or 
received  from,  independently  of  the  means  of  payment  used  (credit  transfer  or  card 
payment).  Such  transparency  –  today  impossible  to  imagine  -  would  be  translated  into  a 
pricing documentation as below.  

35 Cash withdrawal and card payment average fees approximated through the minimum and maximum prices 
offered by payment services providers in each country 

37 

 
 
 
 
 
 
 
                                                            
Table 15: The full transparency ideal 

Bank A - Transactions within the EU 

Payment type 

Any transaction in the EU 

Fees 

xxx EUR 

FX costs if applicable 

Details on how FX costs are calculated  

By  contrast,  today's  pricelists  are  rather  long  differentiating  incoming  and  outgoing 
transactions,  domestic  and  cross-border,  sub-divided  by  currencies  (local,  euro,  other 
currencies of the EU, other currencies), with separate categories for credit transfers, direct 
debits, card payments and cash withdrawals, as below. 

Table 16: Typical fee information document for payment services users 

Specific objective 3: modernised payment systems  

The  lowering  of  fees  should  be  achieved  through  the  modernisation  of  payment  systems 
and  the  ensuing  efficiency  gains,  rather  than  by  forcing  payment  services  providers  to 
cross-subsidise cross-border transactions or stop offering them altogether. The likelihood 
of  triggering  a  modernisation  of  payments  systems  in  the  EU  (infrastructures,  processes, 
standards…)  will  be  assessed  for  all  options.  As  an  example,  a  modern  payment  system 
would be an EU wide cross-currency clearing and settlement infrastructure with standard 
formats  for  all  credit  transfers  and direct debits to  which payment services providers are 
connected across the EU, directly or indirectly, at very low cost. Such a solution already 
exists today for euro cross-border payments. As a consequence, options only covering euro 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
payments are unlikely to trigger such a modernisation of the payment infrastructure that is 
already  there.  It  may  still  push  the  potential  very  few  payment  services  providers  that 
would not offer euro cross-border payments today to connect to such infrastructure as the 
use of cross-border payments in euro increases and in order to reduce their internal costs.  

The benefits that such a modernised environment would bring are difficult to quantify. The 
SEPA  study  conducted  by  CapGemini36  for  the  Commission  in  2007  indicated  that  the 
switch from the legacy system to the SEPA system would reduce the operational costs of 
banks by EUR 49 billion over 5 years in the best scenario (see figure 8 of the study 'Delta 
Op Costs'). Considering the very close resemblance between the switch to SEPA and the 
switch that would allow fee reductions for all cross-border transactions, this amount can be 
used  as  a  basis.  However,  the  volume  of  payments  involved  is  not  comparable  with  the 
SEPA  volumes.  Option  4  for  instance  would  cover  about  90  million  additional  credit 
transfers compared to Option 3; the total number of SEPA transactions is around 200 times 
this  volume  (above  15  billion  transactions  per  year).  The  benefits  linked  to  operational 
costs  for  modernised  payment  systems  for  all  transactions  in  the  EU  could  then  be 
estimated at about EUR 500 million over 5 years (retaining a conservative hypothesis of 
about 1% of the gains brought by SEPA). 

Specific  objective  4:  Equal  access  to  low-cost  payments  for  euro  area  and  non-euro 
area citizens and enterprises 

Ensuring  that  all  EU  citizens  and  enterprises  can  benefit  from  low-cost  cross-border 
transactions  is  the  maximum  reachable  benefit.  This  would  entail  that  any  citizen  or 
enterprise of the EU is able to any other citizen or enterprise anywhere in the EU at low 
costs.  

6.1.2.  Potential indirect benefits 

Moving  towards  these  four  specific  objectives  also  brings  indirect  benefits  of  a  general 
nature  such  as  a  more  integrated  EU  with  increased  economic  efficiency  and 
prosperity thanks to lower transaction costs that should translate into an increased number 
of  cross-border  transactions  compared  to  current  trends  described  earlier  in  the  'baseline 
scenario'. 

Also, the proposal would entail reputational benefit for the EU among European citizens as 
the  reduction  of  fees  for  cross-border  payments  resembles  the  regulation  on  telecoms 
roaming charges, one of the most popular achievements of the EU over the recent years. 
These reputational benefits are hard to quantify; nevertheless they increase support for the 
EU and may enhance the EU's capacity to tackle other policy challenges. 

6.1.3.  Overview of costs 

Specific objective 1: reduce the fees of cross-border payments for all 

  Substantial  compliance  costs  for  PSPs:  revenue  losses  for  PSPs  would  be  the 
exact  opposite  of  the  overall  savings  described  before  for  retail  payment  services 

36  Capgemini  study  on  SEPA.  Available  at:  http://ec.europa.eu/internal_market/payments/docs/sepa/sepa-
capgemini_study-final_report_en.pdf 

39 

 
 
 
                                                            
 
users,  consumers  and  SMEs,  i.e.  an  estimated  EUR 1.47  billion/year.  Indeed,  the 
fees  charged  to  payment  services  users,  if  reduced,  will  directly  impact  the 
revenues of payment services providers. In a dynamic perspective, however, these 
reduced fees should encourage payment services users to make  more transactions 
and  allow  payment  services  providers  to  recover  part  of  their  losses  through 
increased  activity.  Banks  may  continue  to  derive  significant  earnings  from  cross-
border  transactions.  A  recent  article37  disclosed  that  half  of  one  major  bank's 
revenues  from  cross-border  payments  resulted  from  currency  conversion  margins 
while transaction fees accounted for about 28%. The option analysis will estimate 
which  option  is  likely  to  have  the  biggest  impact  on  payment  services  providers' 
revenues  

  Indirect costs for PSUs: Banks may respond to reduced transaction fees by trying 
to increase domestic payments fees – the most likely scenario. However, domestic 
fees  are  well-known  and  any  increase  would  not  go  unnoticed  by  consumers  and 
SMEs, causing them to look for cheaper competitors. Payment services providers 
could  also  increase  the  basic  fees  for  bank  accounts  or  increase  their  margins  on 
currency conversion. Though hard to quantify, the option analysis will estimate the 
likelihood of such attempts to recoup lost revenues from transaction fees.  

  Enforcement costs for supervisors in charge of the correct implementation of the 
respective options will also be estimated as any option will trigger additional work 
to  verify  that  fees  applied  by  payment  services  providers  are  aligned  with 
regulation.  This  may  require  the  periodic  review  (research  of  data  on  bank 
websites)  and  analysis  (comparing  prices)  of  data/documentation  provided  by 
payment  services  providers.  Depending  on  the  particular  Member  State,  the 
number  of  payment  services  providers  to  review  could  range  from  a  dozen  to 
hundreds. So even with an ex ante review of prices, enforcement does not appear 
particularly  complex  and  costly38.  Reviews  may  not  need  to  be  conducted  on  an 
annual basis, but could be done in response to complaints from payment services 
users.  The  estimated  maximum  cost  for  annual  reviews  of  fees  appears  to  be 
marginal and would not exceed EUR 1 million for the 28 Member States together. 
While  complaint  and  redress  procedures,  penalties  and  competent  authorities  are 
already  in  place  under  Regulation  924,  some  additional  costs  may  result  from  an 
increased number of complaints 

Specific objective 2: increase the transparency of cross-border payments 

  Enforcement  costs  for  supervisors:  as  an  indirect  consequence  of  additional 
transparency,  supervisors  will  be  faced  with  additional  complaints  from  payment 
services users, justified or not, in relation to the cost of their cross-border transfers. 
The European Commission already deals with such complaints in the framework of 
the SEPA Regulation and IBAN discrimination and estimates that  0.5 FTE is  the 
maximum cost to associate with such complaints. Based on an average junior civil 
servant  salary  of  EUR  50.000,  a  EUR  25.000  recurrent  cost  is  associated  to  this 
specific objective. The maximum cost incurred would be EUR 700.000 for the 28 
Member States altogether which remains very limited. 

https://www.theguardian.com/money/2017/apr/08/leaked-santander-international-money-transfers-

37 
transferwise?CMP=share_btn_link  
38 Supervisors already carry out compliance checks as regards Regulation 924/2009 (which already foresaw 
complaint and redress procedures, penalties and competent authorities) in all Member States; hence the costs 
for supervisors would increase only marginally. 

40 

 
 
                                                            
  Administrative  costs  for  PSPs:  Regarding  payment  services  providers,  fee 
documentations  would  have  to  be  changed,  on  their  websites  and  on  any  paper 
documentation that would be available to payment services users. It is assumed that 
payment  services  providers  regularly  update  (annually)  their  price  information 
documentation  which,  as  a  consequence,  advocates  not  taking  account  this  cost 
here.  However,  there  will  be  an  IT  cost  for  the  update  of  information  on  the 
payment  services  providers'  websites  and,  most  importantly,  their  internal  IT 
systems  (e.g.  billing  tools).  Commission  services  estimate  that  this  would  imply 
about 1 man day for each payment services providers and about 5000 man-days in 
aggregate  for  the  EU.  Considering  a  man  day  cost  average  of  EUR  300  (EU 
standard cost ISCO1/ISCO2 around EUR 35/hour), this cost amounts to EUR 1.5 
million. 

Specific objective 3: modernised payment systems 

  Indirect  cost  for  PSPSs:  the  maximum  cost  that  will  be  incurred  by  the  EU 
payments market would result from the development and implementation of an EU 
wide cross-border and cross-currency infrastructure to which all payment services 
providers  would  be  connected,  directly  or  indirectly  through  other  payment 
services  providers,  and,  in  parallel,  the  adoption  of  new  standards  for  non-euro 
currency  payments  in  order  to  allow straight-through processing (i.e. without any 
manual intervention). As a benchmark, the total estimated investment cost of SEPA 
will  be  used.  In  the  Capgemini  study  accompanying  the  SEPA  Regulation, 
investments by payment services providers needed to comply with the Regulation 
(common  standards  for  the  euro  payments,  migration  of  legacy  systems…)  was 
estimated at EUR 7 to 10 billion for the EU. The maximum costs would be that of a 
similar  exercise  as  the  SEPA  migration  for  non-euro  payments  though  the 
magnitude of the costs would be reduced as the investments in infrastructures that 
were done for SEPA would also be re-used for other currencies of the EU. The ex-
post Europe Economics study39 of 2016, estimated the investments in SEPA Credit 
Transfer  at  around  GBP  2.9  billion  (see  table  3.24  of  the  study).  This  will  be 
retained as a figure closer to reality here (for ease of reading EUR 3 billion). This 
cost  would  be  a  one-off  cost  as  recurring  costs  would  be  equivalent  to  the  ones 
already borne by payment services providers today. 

Specific  objective  4:  equal  access  to  low-cost  payments  for  euro  area  and  non-euro 
area citizens and enterprises - No costs are foreseen under this specific objective. 

6.2.  Baseline scenario 

In the baseline scenario, the status quo is kept. Fees for cross-border transactions in non-
euro  countries  remain  unchanged  and  determined  by  the  market  and  individual  national 
regulators. Benefits and costs are not estimated under this scenario. Current growth trends 
are  maintained.  The  extent  to  which  the  stated  objectives  and  related  benefits  would  be 
achieved depends on market developments that may put pressure on fees for cross-border 

39 
https://www.psr.org.uk/sites/default/files/media/PDF/ISO-20022-in-SEPA-FINAL-report.pdf  

Economics 

November 

Europe 

study, 

2016. 

See 

Available 

at: 

41 

 
 
 
                                                            
 
payments and on the Member States' political will to tackle the issue, for instance through 
an opt-in under article 3.1 and 3.3 of Regulation 924.  

The  time  horizon  for  any  positive  change  that  might  occur  would  be  very  long,  and 
payment  services  users  are  unlikely  to  see  a  strong  decrease  in  the  price  of  cross-border 
payments  in  the  short  to  medium  term  based  on  recent  trends  as  competitors  such  as 
FinTech  companies  will  have  difficulties  and  at  least  need  time  to  offer  the  reachability 
and scope of services that can match the ones provided by incumbents. 

Winners and losers 

The  status  quo  would  mainly  benefit  incumbent  payment  services  providers  who  would 
continue  to  benefit  from  high  revenues  resulting  from  high  fees,  while  new  players  may 
have  better  opportunities  for  undercutting  prices  and  establishing  themselves  on  the 
market. Payment services users in non-euro countries would continue to be  marginalised 
and prevented from taking full advantage of the Single Market. 

Table 17 – Impacts on different stakeholders of the Baseline scenario   

Payment Services 
Users 

Payment Services 
Providers 

Supervisors 

EU Society / Single 
Market 

Impact 

= 

= 

= 

= 

Stakeholder views 

The baseline scenario is the favoured option for payment services providers as expressed 
in  the  answers  provided  to  the  Open  Public  Consultation.  Payment  services  providers, 
banks  in  particular,  expressed  the  view  that  the  market  would  fix  the  issue  of  expensive 
fees  through,  for  instance,  through  the  rise  of  FinTech  solutions.  By  contrast,  this  is  the 
least  favoured  solution  put  forward  by  payment  services  users,  be  they  individual 
consumers or companies, as the status  quo will keep their costs high. This option is also 
rejected by the European Parliament.40 

6.3.  Option 1: Extending Regulation 924 to local currencies 

Option 1 would consist in a legislative proposal equalising fees for domestic and cross-
border non-euro national currency transactions, making one of the two opt-ins foreseen in 
Regulation 924 mandatory.  

6.3.1.  Benefits 

Specific objective 1: the number of transactions that will be covered by such an extension 
will  be  limited  to  the  non-euro  local  currency  cross-border  transactions  made  from  non-
euro Member States. These are estimated to account for 0.5% of all intra-EU cross-border 
transactions  from  non-euro  Member  States.  Card  payments  and  cash  withdrawals  would 
not be covered as they do not take place in local currencies across borders. Non-euro area 
citizens  would  mainly  benefit  from  this  and  only  for  a  rather  limited  part  of  their  cross-
border transactions. Payment services users would save around EUR 10 million annually.  
Rating: + 

40 2017/2066(INI) 

42 

 
 
 
 
 
                                                            
Specific  objective  2:  the  transparency  of  cross-border  payments  will  increase  though 
leaving much to improve.  Rating: + 

Specific  objective  3:  a  modernisation  of  payment  markets  is  unlikely  as  the  volumes  at 
stake are too low. Payment services providers would more likely cross-subsidise the local 
currency  cross-border  payments  with  revenues  from  other  services  rather  than  invest  in 
infrastructure for 0.5% of their transactions. Rating: = 

Specific  objective  4:  differences  between  EU  citizens  and  enterprises  based  on  their 
currency  and  Member  State  will  slightly  decrease.  However,  since  the  local  currency  of 
the  user  is  hardly  used  for  cross-border  transactions  abroad,  the  differences  between  EU 
citizens and enterprises based on their currency and Member State will hardly be reduced. 
Rating: + 

6.3.2.  Costs 

Specific  objective  1:  considering  the  volumes  involved,  the  revenue  loss  for  payment 
services  providers  will  be  limited  (EUR  10  million  annually),  but  cross-border  payment 
services  in  local  currency  would  have  to  be  offered  at  loss.  There  could  be  attempts  to 
raise domestic payments fees or currency conversion margins to recoup some of the lost 
revenue. Rating: - 

Specific  objective  2:  supervisors  or  payment  services  providers  would  suffer  regulatory 
and compliance costs. This would be limited to non-euro area Member States' supervisors. 
Rating: - 

Specific  objective  3:  payment  markets  modernisation  is  unlikely,  no  cost  associated. 
Rating: = 

Table 18 – Option 1's score on specific objectives 

Benefits 

Costs 

SO1 

+ 

- 

SO2 

+ 

- 

SO3 

= 

= 

SO4 

+ 

NA 

6.3.3.  Overall assessment 

Effectiveness, efficiency, coherence 

Although  this  option  would  mirror  what  exists  today  for  euro  area  countries,  its 
effectiveness is very limited. This is due to the fact that cross-border payments from non-
euro  area  countries  to  the  rest  of  the  EU  will  almost  always  take  place in  euro  or  in  the 
currency  of  the  "target"  country  (more  citizens,  more  countries,  and  more  enterprises  to 
interact  with),  and  not  in  the  local  currency  of  the  payer41.  Its  efficiency  is  poor:  even 
though total costs for stakeholders will not be high, costs will only be reduced for 0.5% of 
the transactions. The option is coherent with the Single Market, but would only bring very 
minor  improvements.  The  reach  of  low  cost  cross-border  payments  from  non-euro  area 
Member States would still remain much lower than from euro area countries. 

Winners and losers 

41  The  original  Regulation  addressed  a  special  situation,  where  the  currency  of  the  "target"  country  is  the 
same as the local currency of the payer. 

43 

 
 
 
 
                                                            
On the basis of the above, the table below summarises the  impacts of  Option  1 for each 
category  of  stakeholders.  Payment  services  users  are  the  main  beneficiaries  though  the 
benefits are very limited. Supervisors will be impacted with additional compliance work. 

Table 19 – Impacts on different stakeholders of Option 1   

Payment Services 
Users 

Payment Services 
Providers 

Supervisors 

EU Society / Single 
Market 

Impact 

+ 

- 

- 

= 

Option 1 has no environmental impact 

Stakeholder views 

This option was not favoured by any of the stakeholders who responded to the consultation 
as indicated in Annex 2. On the contrary, many payment services providers insisted on the 
difference between euro transactions as straight-through low-cost transactions compared to 
other  currencies.  In  addition,  this  opt-in  was  not  exercised  by  any  Member  State  except 
Sweden. This option would lack ambition from the European Parliament's point of view.42 

6.4.  Option 2 – Extending Regulation 924 to local currencies and euro cross-

border payments 

Option 2 encompasses option 1 and adds a requirement to also equalise fees for cross-
border transactions in euro with domestic transaction fees.  

6.4.1.  Benefits  

Direct benefits 

Specific objective 1: the number of transactions that will be covered by such an extension 
will  increase  substantially,  leaving  outside  the  scope  only  cross-border  transaction  from 
euro area Member States that do not take place in euro and those between two non-euro 
area  Member  States  in  another  currency  than  that  of  the  initiator  of  a  transaction.  This 
option would cover at least  80%  of all  intra-EU cross-border transactions from non-euro 
Member States. Non-euro area citizens would mainly benefit from this option. In particular 
certain Member States where prices are very high would benefit more. Euro area citizens 
and businesses would also benefit from it to the extent that they could receive payments at 
a  lower  cost  from  non-euro  countries,  making  it  easier  to  offer  goods  and  services.  The 
overall savings would amount to about EUR 900 million/year. Rating: +++ 

Specific  objective  2:  the  transparency  of  cross-border  payments  in  non-euro  Member 
States will be further increased. Rating: +++ 

Specific  objective  3:  this  option  will  not  have  a  different  impact  on  the  market  from 
option  1  as  the  additional  transactions  covered  (euro  payments)  are  already  benefitting 
from  a  modern  infrastructure.  It  would  only  have  a  minor  positive  impact,  providing 
incentives to connect to the euro payments infrastructure for those PSPs that have not yet 
done so. Rating: + 

42 2017/2066(INI) 

44 

 
 
 
 
                                                            
Specific  objective  4:  EU  citizens  and  enterprises  will  have  similar  access  to  low-cost 
cross-border  transactions  achieving  a  similar  reach  of  EU  citizens  and  businesses, 
regardless of their currency and their Member State of residence. Rating: +++ 

Indirect benefits 

Various  indirect  benefits  may  stem  from  this  option  to  the  extent  that  it  fosters  deeper 
economic integration of EU. Such integration would further contribute to the establishment 
of  a  level  playing  field  for  (SME)  companies  and  more  equality  between  consumers  of 
euro  area  and  non-euro  area  countries.  This  option  may  promote  economic  growth  as  it 
stimulates  cross-border  activity  in  the  forms  of  trade,  travel  or  tourism,  benefiting  both 
euro area and non-euro area Member States alike. These indirect benefits would increase 
the legitimacy and appreciation of the EU. This option is also very similar to the roaming 
regulation in telecoms.  

6.4.2.  Costs 

Specific objective 1: payment services providers in non-euro Member States would face a 
much higher loss of revenues than under option 1 (EUR 900 million/year), but would still 
earn  profits  from  providing  cross-border  payments  in  euro  due  to  the  low  costs  of  euro 
transactions. There could be an impact on domestic payments fees if banks try to recoup 
lost  revenues.  However,  as  the  costs  of  cross-border  euro  transactions  are  already  much 
lower  than  for  other  currencies  (without  a  modern  infrastructure  for  cross-border 
payments),  this  option  would  mainly  ensure  that  the  benefit  of  lower  costs  for  euro 
transactions is passed on to consumers. Rating: -- 

Specific  objective  2:  supervisors  or  payment  services  providers  would  suffer  regulatory 
and  compliance  costs  slightly  higher  than  the  ones  foreseen  in  option  1  considering  the 
extended scope, but they would still be limited. Only supervisors in non-euro area Member 
States' would be affected. Rating: - 

Specific objective 3: payment markets modernisation is more likely, with some payment 
services providers having to invest to become connected to euro clearing infrastructures if 
they are not already connected. Rating: - 

Table 20 –Option 2's score related to specific objectives 

Benefits 

Costs 

SO1 

+++ 

-- 

SO2 

+++ 

- 

SO3 

+ 

- 

SO4 

+++ 

NA 

6.4.3.  Overall assessment 

Effectiveness, efficiency, coherence 

This  option's  effectiveness  is  high  thanks  to  the  broad  coverage  of  cross-border 
transactions  for  which  fees  will  be  reduced.  Its  efficiency  is  still  not  optimal  as  the 
extension  to  local  non-euro  currencies  means  that  PSPs  have  to  cross-subsidise  the 
transactions  that  are  also  covered  by  option  1.  However,  to  the  extent  that  PSUs  will 
switch from local currency to euro transaction across borders, the number of costly cross-
border transactions in local currencies may be lower, thus limiting the costs for PSPs. The 

45 

 
 
 
 
coherence with the Single Market ideal is very high as this option fully integrates the non-
euro area with the rest of the EU. 

Winners and losers 

Payment  services  users  are  the  main  beneficiaries,  but  payment  services  providers  face 
bigger revenue losses. 

Table 21 – Impacts on different stakeholders of Option 2   

Payment Services 
Users 

Payment Services 
Providers 

Supervisors 

EU Society / Single 
Market 

Impact 

+++ 

- - 

- 

++ 

Option 2 has no environmental impact 

Stakeholder views 

This  option  was  not  favoured  by  payment  services  providers,  which  repeatedly  claimed 
that  cross-border  local  currency  transactions  are  costly  transactions.  Many  of  them 
highlighted  the  difference  between  euro  transactions  as  straight-through  processed  low 
cost  transactions  compared  to  other  (local)  currencies.  In  addition,  this  opt-in  was  not 
exercised by any Member State in the last  17 years,  which would tend to  prove it is not 
optimal. By contrast, payment services users would support this option, which would also 
find the favours of the European Parliament43. 

6.5.  Option 3 – Extending Regulation 924 only to euro cross-border payments 

Option 3 differs from Options 1 and 2 as it would require the equalisation of fees for 
domestic transactions in the national currency and cross-border transactions only for 
euro cross-border transactions. Option 1 would remain an opt-in in Regulation 924. 

6.5.1.  Benefits  

Direct benefits 

Specific objective 1: the number of transactions that will be covered by such an extension 
will only marginally decrease compared to option 2 leaving aside cross-border transactions 
that take place in local currencies (0.5% as discussed under Option 1). This option would 
still cover 80% of all intra-EU cross-border transactions from non-euro Member States. As 
for option 2, the main beneficiaries of this option would be non-euro area citizens. Euro 
area citizens and businesses would also benefit from it to the extent that they could receive 
payments  at  a  lower  cost  from  non-euro  countries,  making  it  easier  to  offer  goods  and 
services. The overall savings for payment services users would amount to about EUR 900 
million/year. Rating: +++ 

Specific objective 2: the transparency of cross-border payments will be slightly lower than 
under option 2.  Rating: ++ 

43 2017/2066(INI) 

46 

 
 
 
 
                                                            
Specific  objective  3:  as  this  option  is  limited  to  euro  payments  for  which  a  modern 
infrastructure is already available, it should only have a minor positive impact, providing 
incentives to connect to the euro payments infrastructure for those PSPs that have not yet 
done so. Rating: + 

Specific  objective  4:  EU  citizens  and  enterprises  will  have  similar  access  to  low-cost 
cross-border  transactions  achieving  a  similar  reach  of  EU  citizens  and  businesses, 
regardless of their currency and their Member State of residence. Rating: +++ 

Indirect benefits 

As  per  option  2,  impacts  on  the  EU's  reputation  and  economic  integration  would  be 
significant. Similarly, this option may also foster growth, and provide a level-playing field 
for commerce.  

6.5.2.  Costs 

Specific  objective  1:  PSPs  would  face  large  revenue  losses  (EUR  900  million/year), 
almost  to  the  same  extent  as  under  option  2  without  necessarily  making  losses  when 
offering  cross-border  payments.  There  could  be  an  impact  on  domestic  payments  fees  if 
PSPs try to recoup some of these forgone revenues, but they will not have to offer cross-
border payments at loss, so there is no need for cross-subsidization. Rating: - 

Specific  objective  2:  supervisors  or  payment  services  in  non-euro  area  Member  States 
would face regulatory and compliance costs that are similar to those under option 1 (one 
currency involved). Rating: - 

Specific  objective  3:  as  for  option  2,  costs  would  remain  limited  as  the  infrastructure  is 
already in place. Rating: - 

Table 22 –Option 3's score related to specific objectives 

Benefits 

Costs 

SO1 

+++ 

- 

SO2 

++ 

- 

SO3 

+ 

- 

SO4 

+++ 

NA 

6.5.3.  Overall assessment 

Effectiveness, efficiency, coherence 

This  option  brings  all  the  benefits  of  Option  2  (except  for  the  0.5%  of  transactions  not 
covered) while avoiding most of the costs of Option 1. Its effectiveness is ensured by the 
large number of transactions covered, similar to the one of Option 2. In addition, citizens 
and  enterprises  from  non-euro  area  Member  States  have  access  to  euro  accounts  which 
allow them to transact easily in euros from their countries (send and receive). Its efficiency 
reaches the maximum possible level of all options studied, as it is limited to cross-border 
payments in euro for which an efficient infrastructure is already in place. The coherence 
with EU policies is ensured, in particular regarding the Monetary Union by giving the euro 
a pivotal role for all EU Member States. 

Winners and losers 

47 

 
 
 
 
As for option 2, payment services users benefit strongly while payment services providers 
face significant revenue losses. However, in contrast to option 1 and 2, they do not need to 
cross-subsidise inefficient cross-border transactions in their local currencies. 

Table 23 – Impacts on different stakeholders of Option 3   

Payment Services 
Users 

Payment Services 
Providers 

Supervisors 

EU Society / Single 
Market 

Impact 

+++ 

- 

- 

++ 

Option 3 has no environmental impact 

Stakeholder views 

Payment  services  providers  emphasized  the  difference  between  euro  transactions  as 
straight-through, low-cost transactions compared  to transactions in other currencies. This 
option would be the least problematic way of extending the scope of Regulation 924. This 
option would also come close to the views of the European Parliament.44 In addition, the 
EP  report  on  the  Action  Plan  referred  to  the  absence  of  a  "common  European  online 
banking payment instrument"; this option would allow developing such an instrument for 
the  entire  EU  on  the  basis  of  SEPA  credit  transfers  for  instance.  Payment  services  users 
would also support this option.  

6.6.  Option 4 – Extending Regulation 924 to all currencies of Member States 

of the EU 

Finally,  Option  4  would  require  PSPs  to  align  their  fees  for  all  cross-border 
transactions  between  EU  countries  in  whatever  EU  currency  with  domestic 
transactions, including transactions in currencies that are not the ones of the sending 
or receiving country. 

6.6.1.  Benefits  

Direct benefits 

Specific objective 1: the number of transactions that will be covered by such an extension 
will  reach  the  maximum  possible  that  is  to  say  100%  of  all  cross-border  transactions 
within the EU. Maximum savings would be reached under this option, close to EUR 1.5 
billion/year. Rating: +++ 

Specific  objective  2:  the  transparency  of  cross-border  payments  will  be  maximized.  
Rating: +++ 

Specific  objective  3:  this  option  is  the  one  that  is  most  likely  to  lead  to  an  upgrade  of 
infrastructures for cross-border payments in non-euro currencies. It is more likely to justify 
the  development  of  a  multi-currency  EU-wide  infrastructure,  thanks  to  the  additional 
transactions originated from euro Member States. However, there is no certainty that this 
major  modernisation  will  happen,  and  PSPs  may  instead  resort  to  cross-subsidisation  or 
limiting  their  offer  of  cross-border  transactions.  Indeed,  PSPs  may  only  recoup  their 
investment over a very long period (see costs) Rating: ++ 

44 2017/2066(INI) 

48 

 
 
 
 
                                                            
Specific objective 4: all EU citizens and enterprises will have the same access to low-cost 
cross-border  transactions,  regardless  of  their  currency  and  their  Member  State  of 
residence. Rating: +++ 

Indirect benefits 

As per option 2 and 3, impacts on the EU's reputation, economic integration and economic 
growth would be very significant. 

6.6.2.  Costs 

Specific objective 1: PSPs would face large revenue losses and additional costs for cross-
border  transactions  in  currencies  other  than  the  euro  (in  total,  close  to  EUR  1.5 
billion/year)  that  they  would  have  to  offer  at  loss  at  the  same  price  as  domestic 
transactions. Rating: --- 

Specific  objective  2:  supervisors  or  payment  services  providers  would  face  higher 
regulatory  and  compliance  costs  than  under  options  1,  2  and  3,  as  non-euro  and  euro 
Member States would be impacted. Rating: --- 

Specific objective 3: costs of a payment systems modernisation to cater for non-euro area 
currencies would be significant, but it is not certain that PSPs would actually make such 
investments (estimated at 3 billion euros). An alternative and possible vehicle could be the 
TIPS solution developed by the ECB for instant payments in euro. However, it is too soon 
to evaluate the capacities of this infrastructure to bring an answer to the issue of non-euro 
transactions. In addition, this infrastructure is designed for instant payments in euro which 
large scale adoption should only take place as of 2020. An extension to other currencies is 
still difficult to evaluate. Rating: --- 

Table 24 –Option 4's score related to specific objectives 

Benefits 

Costs 

SO1 

+++ 

--- 

SO2 

+++ 

--- 

SO3 

++ 

--- 

SO4 

+++ 

NA 

6.6.3.  Overall assessment 

Effectiveness, efficiency, coherence 

This option is very effective and brings the largest benefits to EU payment services users. 
However, these benefits may come at a high price as either major investments would have 
to be undertaken to cater for the additional transactions and maintain low internal costs to 
remain profitable (up to EUR 3 billion one-off as described earlier in this chapter). Failing 
that, cross-subsidization would have to happen, or PSPs might not offer the full range of 
cross-border  transactions  when  price  does  not  cover  costs.  The  benefits  brought  by  a 
renewed  infrastructure  and  processes  were  earlier  estimated  at  EUR  500  million  over  5 
years; this may not be efficient in view of the long period of time required to recoup these 
investments,  estimated  at  30  years  (EUR  3  billion  investment  for  roughly  EUR  100 
million/year efficiency gains). During such a long period, some Member States may adopt 
the euro, reducing further the incentives for Option 4. Coherence with EU policies is lower 

49 

 
 
 
 
 
than  for  other  policy  options  as  this  option  could  amount  to  abandoning  the  goal  of 
integrating all Member States into the Monetary Union. 

Winners and losers 

This  option  would  benefit  payment  services  users,  but  would  imply  significant  costs  for 
PSPs. 

Table 25 – Impacts on different stakeholders of Option 4   

Payment Services 
Users 

Payment Services 
Providers 

Supervisors 

EU Society / Single 
Market 

Impact 

+++ 

- - - 

- - 

++ 

Option 4 has no environmental impact 

Stakeholder views 

This  option  was  not  presented  in  the  public  consultation.  However,  it  can  be  anticipated 
that payment services providers would not support this option as they would have to invest 
in  non-euro  currency  processing  and  infrastructure  with  very  uncertain  prospects  of 
recouping  the  investment,  let  alone  earning  a  return;  alternatively,  they  would  have  to 
cross-subsidise  unprofitable  transactions.  Payment  services  users  could  be  in  favour  of 
such  an  option,  but  they  may  face  increased  domestic  fees  to  finance  infrastructure 
investments  or  cross-subsidise  non-euro  transactions.  The  European  Parliament  did  not 
consider such a wide-ranging approach.45  

45 2017/2066(INI) 

50 

 
 
 
 
 
                                                            
7.  HOW DO THE OPTIONS COMPARE? 

The analysis of options is summarised in tables 26 and 27. The scores for effectiveness are 
directly taken from the  previous section, whereas efficiency looks at the costs associated 
with  each  option  in  relation  to  their  effectiveness.    Option  4  incurs  the  highest  costs 
(including  losses  on  non-euro  cross-border  transactions)  and  the  largest  number  of 
transactions  covered.  Option  1  implies  the  lowest  costs,  but  covers  by  far  the  smallest 
number of transactions. The best efficiency is achieved by Option 3 under which PSPs will 
not  have  to  cross-subsidise  transactions  or  invest  in  infrastructure  while  having  to  offer 
low  prices  for  the  vast  majority  of  cross-border  transactions  in  non-euro  countries.  PSPs 
will face significant revenue losses under all options with the exception of option 1. 

As  regards  coherence  of  the  options  with  other  EU  policy  objectives,  one  may  note  that 
each of the options contributes to a better functioning of the Single Market. Those options 
that  lower  the  costs  of  non-euro  transactions  may  run  counter  to  the  long-term  goal  of 
bringing  all  Member  States  into  Monetary  Union,  whereas  option  3  in  particular  brings 
some key benefits of the single currency also to the residents and businesses in non-euro 
countries. 

Table 26: comparison of options in terms of effectiveness, efficiency and coherence 

Objectives 

Effectiveness 

Objective 
1 

Objective 
2 

Objective 
3 

Objective 
4 

Efficiency 

Coherence 

Comments 

Policy 
options 

Baseline 

Option 1 

= 

+ 

= 

+ 

Option 2 

+++ 

+++ 

Option 3 

+++ 

++ 

= 

= 

+ 

+ 

= 

+ 

= 

= 

+++ 

++ 

= 

+ 

++ 

+++ 

+++ 

+++ 

Small share of transactions 
covered; need to cross-
subsidise 
Large number of transactions 
covered, but need to cross-
subsidise non-euro transactions  
Large number of transactions 
covered; fully consistent with 
Monetary Union goal; no cross-
subsidisation needed 
Most ambitious in terms of 
coverage, but costly. Would 
only make sense if Monetary 
Union goal is abandoned by 
non-euro countries 

Option 4 

+++ 

+++ 

++ 

+++ 

+ 

+ 

Table 27: comparison of options in terms of impacts on different stakeholders 

Baseline 

Option 1 

Option 2 

Option 3 

Option 4 

Payment Services 
Users 
= 
+ 
+++ 
+++ 
+++ 

Payment Services 
Providers 
=  
- 
- -  
- 
- - -  

Supervisors 

= 
- 
- 
- 
- - 

EU Society / Single 
Market 
= 
= 
++ 
++ 
++ 

51 

 
 
 
 
 
 
8.  PREFERRED OPTION 

Among  the  three  highly  effective  options  (2,  3  and  4),  Option  3  appears  as  the  most 
efficient, given that the infrastructures are already in place for euro payments so that they 
can  be  made  at  very  low  costs,  as  straight-through  processed  and  automated  payments. 
Option 2 would only bring an additional 0.5% number of transactions within the scope of 
Regulation 924 (compared to Option 3) with high costs for payment services providers in 
relation to the small number of additional transactions. Option 3's effectiveness stems from 
the  volume  of  transactions  covered,  estimated  at  a  minimum  of  80%  of  the  total 
transactions  of  non-euro  Member  States,  which  in  turn  account  for  about  76%  of  the 
maximum scope (euro and non-euro Member States altogether). Overall, this option would 
cover  about  61.5%  of  cross-border  intra-EU  transactions  that  are  today  not  covered  by 
Regulation  924.  Option  3  also  appears  to  be  the  most  consistent  with  EU  policies,  and 
notably the goals of bringing non-euro countries into Monetary Union. Finally, stakeholder 
support would certainly be strongest for either Option 2 or Option 3. However, the costs 
implied  by  including  non-euro  transactions  in  the  scope  would  certainly  result  in  strong 
resistance from payment services providers. 

In addition, various indirect benefits may stem from this option to the extent that it fosters 
deeper  economic  integration  of  EU.  Such  integration  would  further  contribute  to  the 
establishment  of  a  level  playing  field  for  (SME)  companies  and  more  equality  between 
consumers of euro area and non-euro area countries. This option may promote economic 
growth  as  it  stimulates  cross-border  activity  in  the  forms  of  trade,  travel  or  tourism, 
benefiting both euro area and non-euro area Member States alike. These indirect benefits 
would increase the legitimacy and appreciation of the EU.  

In light of the above, the preferred option is Option 3: extending Regulation 924 so 
that  fees  for  cross-border  payments  in  euro  are  equalised  with  the  price  of 
corresponding national transactions in the national currency of non-euro countries. 

8.1. 

Impact on SMEs 

SMEs will experience a positive impact from the introduction of the retained option. SMEs 
based  in  the  euro  area  will  benefit  from  potentially  higher  demand  from  consumers  and 
enterprises  in  non-euro  Member  States  where  high  fees  for  cross-border  payments 
constitute a significant barrier. SMEs based in non-euro area Member States will be given 
lower-cost  access  to  360  million  citizens  (potential  clients)  and  16  million  euro  area 
enterprises  (clients  and  providers).  Hence,  they  can  compete  better  on  the  EU  market. 
Most SMEs, in particular the smallest ones, do not have the capacity to negotiate the fees 
they pay for cross-border payments. This is usually restricted to larger corporate customers 
that benefit from the cash management services of major banks, as was confirmed by the 
responses  given  to  the  open  public  consultation.  An  extension  of  the  Regulation  would 
therefore benefit SMEs much more than larger companies.  

A  report  by  Accourt  illustrated  the  high  costs  of  cross  border  transactions  for  SMEs 
through  a  case  on  the  United  Kingdom.  This  report  found  that  SMEs  in  the  UK  alone 
collectively can  pay  up  to  £  4  billion  GBP  a  year  for  hidden  fees  in  such  transactions46. 
The retained option would only address the part of these transactions made in euros, but 
would still make a significant contribution to allowing effective cost reduction for SMEs, 
particularly if they then switch to making more transactions in euro.  

46 
Report.pdf.  

https://www.moneymover.com/media/uploads/files/UK-SME-International-Payments-Analysis-Full-

52 

 
 
                                                            
8.2. 

Impact on Currency Conversion  

8.2.1. The two currency conversion models 

When  making  a  card  payment  abroad  (making  a  cash  withdrawal  at  ATMs  and  card 
payments  at  a  point  of  sale)  in  a  different  currency  than  his  home  currency,  a  payment 
service user faces two possibilities:  

  paying  in  his  or  her  'home  currency'  using  the  service  of  dynamic  currency 
conversion  service  providers,  or  'DCC'.  This  amount  is  established  by  the    DCC 
provider  on  the  basis  of  its  foreign  exchange  reference  rate  plus  a  mark-up.  This 
mark-up is said to factor in the risk of fluctuation in currency rates. In the payment 
transaction chain, the card issuing bank authorizes a payment in its home currency 
and therefore does not have to engage in the process of currency conversion. The 
amount that is offered to the consumer in the home currency at the POS, or at the 
ATM will therefore be the final amount that will be paid, regardless of the clearing 
at a later stage. 

  paying  in  the  local  currency  using  the  services  of  the  card  scheme  and  his  bank 
(non-DCC or on-network conversion) just as for other payment transaction such as 
credit transfers. The currency conversion to the consumer's home currency happens 
at  the  time  of  clearing  by  his  bank.  In  most  cases,  his  banks  (the  issuing  bank) 
makes  use  of  a  foreign  exchange  rate  offered  by  the  card-scheme  of  the 
cardholder47,  on  top  of  which  its  own  mark-up  can  be  applied,  possibly  in 
combination  with  a  fixed  fee.  The  clearing  and  settlement  therefore  happens  at  a 
later time than the moment the payment was initiated (usually D+1 for such intra-
EU  transactions  in  currencies  of  EU  Member  States).  Because  of  this,  a  different 
foreign exchange rate will apply to the payment than the one at the time when the 
payment was initiated (i.e. the transaction date).  

Art.  59  of  the  Second  Payments  Directive  ('PSD2')48  imposes  transparency  requirements 
for  transactions  in  a  foreign  currency.  This  article  obliges  the  party  offering  currency 
conversion services to disclose to the payer all charges as well as the exchange rate used 
for converting the payment transaction.  

Two issues arise though:   

  Today, the only information displayed in advance to the payment services user is 
the charges that he will pay by using Dynamic Currency Conversion. Information 
on  non-DCC  currency  conversion  is  not  available  at  the  time  of  purchase49.  The 
payment  services  user  is  hence  unable  to  compare  offers  and  make  an  informed 
choice.  

47 https://www.visaeurope.com/making-payments/exchange-rates 
https://www.mastercard.us/en-us/consumers/get-support/convert-currency.html 
48 Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on 
payment  services  in  the  internal  market,  amending  Directives  2002/65/EC,  2009/110/EC  and 
2013/36/EU  and  Regulation  (EU)  No  1093/2010,  and  repealing  Directive  2007/64/EC,  OJ  L  337, 
23.12.2015, p. 35–127 
49 In fact the customer contract contains the mark-up (e.g. 2.1%), a foreign exchange reference rate, that is 
usually fixed after the transaction date (e.g. D+1), and potential additional fees. 

53 

 
 
 
 
 
                                                            
 

In addition, when the consumer is faced with the option of making use of DCC or 
paying  in  the  local  currency,  he  usually  has  to  make  this  decision  in  a  time 
constrained environment (for example in the queue in a shop or at an ATM). This 
creates further difficulty for the consumer to make a beneficial and well-considered 
choice.  

In order to create transparency on the currency conversion market, it is therefore important 
that the consumer is aware of, and presented clearly with the different options in order to 
make an informed decision.  

8.2.2. Risk of costs passed on towards non-transparent factors  

As mentioned various times already in this report, one of the risks posed by the extension 
of  Regulation  924/2009  to  cover  all  cross-border  transactions  in  euros  is  that  the  lost 
revenue is recouped elsewhere in the transaction chain. It is possible that payment service 
providers increase the prices of other services in order  to make  up  for such  lost income. 
Increasing currency conversion charges would be a relatively easy option to recoup losses, 
as  they  are  less  transparent  than  fees  for  e.g.  domestic  transactions  or  account 
management, as often it is not clear for the consumer what the exact mark-up of a currency 
conversion is, or what other extra fees apply.  

Consumers'  lack  of  awareness  on  currency  conversion  is  further  demonstrated  by  the 
results  of  the  open  public  consultation,  where  more  than  2/3  of  the  private  individuals 
believed that consumers are not aware of the different options of currency conversions and 
are unable to make an empowered decision. This makes currency conversion particularly 
susceptible to the recovery of lost revenues by PSPs. In order to ensure that the efforts put 
in amending Regulation 924/2009 are not countered by PSPs to the detriment of payment 
services  users  and  to  ensure  that  they  will  be  able  to  benefit  from  competition  through 
transparency  and  the  capacity  to  make  an  informed  choice,  it  is  important  to  create 
comparable options for the consumer.  

Table 28: Question 13.c of the Open Public Consultation - How aware are consumers 
of the different options for currency conversion that exist and their prices?  

Respondent 

All  
Private 
Individuals 
All Organisations 
- PSUs 
- PSPs 
National 
Authorities  

Not aware 
at all (1) 
26.6 
35.6 

Not aware 
(2) 
22.6 
33.3 

Moderately 
aware (3) 
17.7 
8.9 

23.6 
47.1 
7.5 
0.0 

16.7 
17.6 
12.5 
14.3 

22.2 
5.9 
35.0 
28.6 

Aware (4) 

8.9 
8.9 

8.3 
14.7 
5.0 
14.3 

Fully 
aware (5) 
6.5 
6.7 

6.9 
5.9 
7.5 
0.0 

No opinion 

17.7 
6.7 

22.2 
8.8 
32.5 
42.9 

54 

 
 
 
 
 
Table 29: Question 13.d How empowered are consumers to make the best choices for 
service provider for currency conversions?  

Respondent 

All  
Private 
Individuals 
All 
Organisations 
- PSUs 
- PSPs 
National 
Authorities  

Not 
empowered 
at all (1) 
25.2 
46.7 

Not 
empowered 
(2) 
23.6 
26.7 

Moderately 
empowered 
(3) 
15.0 
11.1 

14.7 

27.8 
7.3 
0.0 

22.7 

30.6 
12.2 
14.3 

14.7 

0.0 
26.8 
42.9 

Empowered 
(4) 

7.1 
6.7 

8.0 

16.7 
2.4 
0.0 

Fully 
Empowered 
(5) 
7.9 
0.0 

13.3 

5.6 
19.5 
0.0 

No 
opinion 

21.3 
8.9 

26.7 

19.4 
31.7 
42.9 

8.2.3. Solution: Further transparency requirements to achieve comparability through 

Regulatory Technical Standards 

In  order  to  mandate  full  transparency  that  would  present  comparable  options  for  the 
consumer it would  be necessary to thoroughly  investigate how this can  best be achieved 
under  the  current  payment  infrastructure.  Such  an  investigation  would  require  further 
stakeholder  consultation  and  assessment  of  technical  specificities  on  both  software  and 
payment  processes.  This  is  especially  the  case  due  to  the  highly  technical  nature  of  the 
considerations  that  need  to  be  given  to  mandating  the  appropriate  transparency 
requirements,  as  well  as  the  fast-paced  technological  development  in  respect  of  payment 
terminals, infrastructure, and software.  

In order to ensure that transparency obligations provide a suitable solution to the technical 
framework, the amendment to Regulation 924 should provide for a mandate for the EBA 
to  address  this  issue  in  the  form  of  Regulatory  Technical  Standards  ('RTS').  This  would 
allow  the  EBA  to  engage  in  the  technical  examination  of  the  relevant  factors  identified 
above in order to come to a technical solution. Through the RTS, the EBA would be able 
to  impose  and  specify  the  transparency  requirement  for  consumers  to  be  both  informed, 
and  make  empowered  decisions.  Such  requirements  could  for  example  stipulate  an 
estimated total local currency equivalent for non-DCC models as well to be presented in 
parallel to the DCC offer at the spot.50 Additionally, such transparency requirements would 
be  able  to  address  the  steering  practices,  if  the  EBA,  after  examination  and  consultation 
believes that this would be relevant to include.  

Such an RTS would have to be accompanied by its own Impact Assessment to be prepared 
by EBA. This provides the opportunity to study current and evolving practices on currency 
conversion of various market players, and will enable the agency to carefully consider all 
relevant costs and benefits of the different requirements. This will guarantee that the final 
transparency requirements are precise, proportionate and suitable as a solution to enhance 
competition  through  transparency,  and  prevent  abusive  prices  or  practices  towards 
consumers.  

The arrangement to develop transparency requirements in an RTS ensures that the timeline 
on  the  equalisation  of  cross-border  fees  under  the  amendment  to  Regulation  924  is  not 

50 In addition, one may consider the presentation of the (estimated) reference foreign currency rates and the 
mark-ups (margin) in percentage. 

55 

 
 
 
 
                                                            
jeopardized  by  further  stakeholder  consultations.  Therefore,  EU  citizens  and  companies 
will not be deprived any longer of the benefits of extending the Regulation as such.  

8.3. 

Impact on competitiveness 

The competitiveness of EU enterprises will be positively affected allowing EU companies 
to reach a wider pool of providers or clients at a lower cost. The EU economy as a whole 
will become more competitive thanks to a tighter economic integration resulting from the 
removal of payment-cost related barriers. 

8.4. 

Subsidiarity and Proportionality  

In line with the principle of subsidiarity as assessed in part 3 of this Impact Assessment, 
the  extension  of  the  Regulation  under  option  3  provides  a  balanced  approach  for  which 
regulation at EU level seems most appropriate. It proposes an alternative to options 1 and 2 
which  Member  States  could  have  used  on  a  voluntary  basis  but  which  would  imply 
significant  costs  for  payment  services  providers.  The  extension  of  Regulation  924  in 
accordance with option 3 will achieve a level playing field for businesses and prevent the 
further continuation of a two-tier Europe for payment services users, which has so far not 
been  achieved  by  non-euro  Member  States  (except  for  Sweden).  Regulation  at  EU  level 
will ensure that the level playing field is extended to the whole of Europe.  

Proportionality is also assured as the preferred option achieves most of the desired benefits 
while keeping the costs of implementation to a minimum, although the loss of revenues for 
PSPs  is  likely  to  be  significant.  However,  the  high  fees  for  cross-border  transactions  in 
euro are not justified in view of the fact that all EU payment service providers have access 
to efficient euro clearing and settlement infrastructures.   

8.5.  UK leaving the EU 

The  figures  presented  throughout  this  impact  assessment  all  include  UK  cross-border 
transactions  and  transactions  in  GBP.  The  UK  leaving  the  EU  would  have  two  major 
consequences in the current context: (1) it would reduce the number of non-euro countries 
that  benefit,  i.e.  UK  citizens  and  enterprises  would  no  longer  benefit  from  the  fee 
reductions;  and  (2)  it  would  reduce  the  savings  of  citizens  and  enterprises  in  the  EU  as 
regards  their  cross-border  transactions  with  the  UK  (most  of  the  time  in  GBP). 
Nevertheless,  it  does  not  change  the  outcome  of  the  impact  assessment  or  the  choice  of 
Option 3 as the preferred option. Firstly, even though one major country51 would no longer 
benefit from the extension of the regulation to euro payments, there would still be seven 
non-euro  Member  States  left  which  would  benefit  from  cheaper  euro  payments52. 
Secondly,  the  UK's  exit  would  further  reduce  the  attractiveness  of  Option  4  as  GBP 
payments  are  likely  to  be  the  most  common  cross-border  non-euro  payments,  hence  the 
benefit  of  extending  the  regulation  to  other  non-euro  currencies  of  the  EU  would  be 
significantly reduced.53 

51 This is not changed by the fact that the UK, being the largest country as regards its population and GDP, 
has  a  dominant  share  within  the  transactions  of  the  non-euro  country  group.  The  share  of  UK  in  credit 
transfers and card payments is about 80% of the total non-euro area payments value. 
52 Unless they transact in EUR with UK counterparties, which is possible but likely to be negligible at best, 
considering that euro is not the local currency of either counterparty. 
53There  are no data  available  on  the  currency  distribution of  payments,  but based  on  the  GDP, UK  (GBP) 
should represent about 60% of cross-border non-euro transactions from EU Member States. 

56 

 
 
 
                                                            
8.6.  REFIT: Simplification and improved efficiency 

Regulation 924 was flagged as  a REFIT  initiative in  the Commission  Work  Programme. 
According to the REFIT goals and methods54, a revision of the Regulation would aim to 
provide a more efficient and effective regulatory framework. Regulation 924 was already 
subject  to  simplification  in  2012  through  amendments  brought  by  the  SEPA  end-date 
Regulation  (EU  260/2012)  which  suppressed  the  EUR  50.000  cap  beyond  which 
Regulation 924 did not apply. A number of reporting obligations were also revised.  

The  retained  option  will  enhance  the  effectiveness  of  Regulation  in  the  spirit  of  REFIT. 
The first recital of Regulation 924 stressed that "for the proper functioning of the internal 
market and in order to facilitate cross-border trade within the Community, it is essential 
that  the  charges  for  cross-border  payments  in  euro  are  the  same  as  for  corresponding 
payments within a Member State". Regulation 924 on cross-border transactions has indeed 
brought tangible benefits to euro area citizens, eliminating payment-related barriers within 
the  euro  area.  Although  Regulation  924  applies  to  all  euro  transactions  in  all  Member 
States, it has not worked for EU citizens and businesses outside the euro area, in spite of 
their  wide-spread  use  of  the  euro  for  cross-border  transactions.  The  retained  option 
(equalisation  of  fees  for  cross-border  transfers  in  euro  with  corresponding  fees  for 
domestic transactions in local currency) would remedy this shortcoming of Regulation 924 
and  would  finally  allow  all  EU  citizens  and  businesses  to  benefit  from  this  Regulation 
which  had  always  been  intended  to  produce  its  positive  effects  in  the  entire  EU  and  not 
just in the Euro area.  

Table 28 - 1.1.  Simplification and improved efficiency– Preferred Option(s) 

Description 

Amount 

Comments 

Direct regulatory benefits from 
reduced fees for cross-border 
payments in euro.  

Clearer and more transparent pricing 
of cross-border transactions in non-
euro countries 

EUR 900 million (61.5% of 
the maximum possible 
savings) – see calculation in 
6.1.2  

Not quantifiable 

Payment Services Users impacted 
(citizens/consumers, SMEs) – Recurrent 

Reputational benefits for the EU; increased 
awareness of the benefits of the euro 

https://ec.europa.eu/info/law/law-making-process/evaluating-and-improving-existing-laws/refit-making-

54 
eu-law-simpler-and-less-costly/refit-platform/role-structure-and-working-methods-refit-platform_en  

57 

 
 
 
 
 
 
                                                            
9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

The  policy  should  be  reviewed  after  three  years  to  evaluate  whether  payment  service 
providers  have  tried  to  recoup  lost  revenues  by  raising  other  prices  and  whether  more 
transactions  should  be  brought  within  the  scope  of  the  Regulation.  To  this  end,  the 
monitoring  and  evaluation  of  the  amendment  to  the  Regulation  should  both  evaluate  the 
effect on transaction fees and currency conversion. 

Regarding the effect on transaction fees, an assessment of market prices for cross-border 
transactions was made for this Impact Assessment, based on the prices applied by the top 
three  to  seven  payment  services  providers  in  each  non-euro  Member  State  and  in  three 
euro  Member  States.  Fees  charged  for  current accounts  have  already  been  studied in  the 
past in the framework of the Payments Account Directive.  

In  addition,  volumes  should  be  analysed:  an  increase  in  volumes  of  euro  transactions 
would  be  considered  a  success  especially  if  transactions  in  other  currencies  would 
decrease.  This  could  mean  that  a  shift  from  non-efficient  transactions  towards  efficient 
transactions took place (this would need to be analysed further). Such developments would 
also need to be compared with trends for domestic transactions. 

This follow-up study should also explore initiatives taken by the market to reduce internal 
costs  for  providing  cross-border  transactions,  if  any.  The  impact  of  the  ECB's  Target 
Instant Payment Settlement (though the use of this new infrastructure is today limited to 
instant payments in euro) or any other developments in this field (i.e. that could come from 
EBA  clearing  or  EACHA)  that  may  take  place  in  the  meantime  on  non-euro  currency 
transactions should also be looked at in order to assess whether Option 4 discussed in this 
paper  could  materialize.  The  indirect  effects  of  level-playing  field  from  cheaper  cross-
border  transactions  and the  resulting  growth  in  the  underlying  cross-border  activity shall 
also be assessed through a qualitative study close to the Eurobarometer55 one (as precisely 
quantifying  the  effects  here  would  be  difficult).  Finally,  it  should  be  assessed  whether 
prices of other basic banking services have changed and whether this could be the result of 
attempts by PSPs to recoup lost revenue from cross-border transactions.  

Also  the  effects  of  amending  the  Regulation  will  require  monitoring  of  currency 
conversion costs. Currency conversion costs are currently only partially known but will be 
studied  by  EBA  under  the  mandate  that  will  be  attributed  to  them.  Similarly  to  the 
Interchange Fee Regulation, a "0 study" could provide a picture of the market before the 
entry  into  force  of  the  amendments  to  Regulation  924/2009.  Three  years  after  entry  into 
force of the reviewed legislation, a similar study could be conducted to monitor how prices 
have evolved. The focus should be in particular on currency conversion margins, domestic 
transaction prices and account fees. 

Monitoring efforts should also strive to offer more detailed payments statistics as publicly 
available  data  remains  limited:  ideally,  reliable  data  should  be  available  for  all  types  of 
payments transactions and all countries of the EU. Payments statistics should include the 
currency  used  for  transactions  (such  data  is  currently  only  available  for  extra-EU 
transactions), provide breakdowns based on the sending and receiving countries, and allow 
the identification of the provider of the currency conversion service (e.g. a bank, Fintech 
company  or  DCC  provider).  These  improvements  will  be  further  discussed  with  the 
European Central Bank. 

55 Special Eurobarometer 446 

58 

 
 
 
                                                            
1.  ANNEX 1: PROCEDURAL INFORMATION 

1.1.  Lead DG, Decide Planning/CWP references 

This Impact Assessment Report was prepared by Directorate D "Regulation and prudential 
supervision  of  financial  institutions"  of  the  Directorate  General  "Directorate-General  for 
Financial Stability, Financial Services and Capital Markets Union" (DG FISMA). 

The Decide Planning reference of the "[xx] 

The  initiative  on  cross-border  payments  was  included  in  the  Action  Plan  on  Consumer 
Financial Services56 under Action #1 and published on 23/03/2017. 

1.2.  Organisation and timing 

Several services of the Commission with an interest in the assessment of the initiative have 
been associated in the development of this analysis. Three Inter-Service Steering Group 
(ISSG) meetings, consisting of representatives from various Directorates-General of the 
Commission, were held in 2017. 

The first meeting focused on the open public consultation strategy. It took place on 29 
June 2017, attended by DG COMP, DEVCO, ECFIN, EMPL, JUST and the Secretariat 
General (SG).  

The second meeting was held on 22 November 2017. The representatives from DG 
ECFIN, COMP, JUST, GROW, EMPL and the Secretariat General (SG) were present and 
the meeting focused on the way forward with the Impact assessment. 

The third meeting was held on 14 December 2017 and was attended by DG ECFIN, 
COMP, JUST, GROW, EMPL and SG. This was the last meeting of the ISSG before the 
submission to the Regulatory Scrutiny Board on 17 January 2018.  

The meetings were chaired by SG.  

DG FISMA has updated the Impact Assessment Report by taking into account the 
comments made by other DGs. In particular, the following points were considered: 

  The  addition  of  content  on  currency  conversion  costs,  not  covered  by  Regulation 
924,  that  could  be  impacted  as  a  switch  of  revenues  from  payment  services 
providers. 

  The  addition  of  a  reference  to  the  roaming  Regulation  as  various  points  of 

similarities were identified with the extension of Regulation 924. 

  A  revision  of  the  Open  Public  Consultation  synopsis  in  order  to  "neutralise" 
questions  that  had  not  received  answers  (expert  questionnaire  not  answered  by 
citizens) in order to present figures that are more easily understandable.  

56 COM/2017/0139 final 

59 

 
 
 
 
                                                            
  Explanations on the reasons why non-euro Member States opted-in or not 

  Practical examples of transactions that would be  impacted by an  extension  of the 

Regulation and benefits for citizens and enterprises  

 

Impacts of the UK leaving the EU 

1.3.  Exceptions to the better regulation guidelines 

No exception from the Better Regulation Guidelines has been identified by DG FISMA.  

1.4.  Consultation of the Regulatory Scrutiny Board 

The Impact Assessment report was examined by the Regulatory Scrutiny Board on 20 
February 2018. The Board gave a positive opinion. 

1.5.  Evidence, sources and quality 

Sources  for  figures  used  through  the  Impact  Assessment  are  all  extracted  from  the  ECB 
public  database  of  payment  statistics  available  on  the  ECB  website  under  the  following 
address:  http://sdw.ecb.europa.eu/reports.do?node=1000004051.  These  were  cross-
checked  with  individual  data  per  Member  State  whenever  available  and  cross-checked 
with Basel Committee data. The quality of this public data was challenged in some cases 
and for very specific Member States  – statistical anomalies are indicated where found in 
annexes (in particular on volumes of transactions). In those specific cases, estimates were 
provided in place of official data.     

In addition the European Commission contracted a dedicated study with Deloitte gathering 
data on official fees charged by banks across the EU in all 9 non-euro Member States as 
well as 3 euro Member States. The same study also looked at volumes of payments as well 
as internal costs borne by payment services providers for euro transactions and non-euro 
transactions.  The  study  is  available  at  https://ec.europa.eu/info/files/180328-study-cross-
border-transaction-fees-extension_en 

Various other sources were used across the Impact Assessment (reports from McKinsey, 
CapGemini, previous studies done in the context of the evaluation of Regulation 924 or the 
publication of the revised Payment Services Directive in 2013) and are indicated whenever 
relevant.  

60 

 
 
 
 
 
 
 
 
2.  ANNEX 2: STAKEHOLDER CONSULTATION 

Introduction 

This stakeholder consultation synopsis report provides a summary of the outcomes of the 
stakeholder  consultation  activities  which  were  carried  out  as  part  of  the  review  of  a 
possible  extension  of  Regulation  924/2009.  The  synopsis  summarizes  the  responses  of 
stakeholder groups that were consulted or provided feedback. Additionally, this synopsis 
analyses the main trends that became evident during the consultation process.  

The aim of the consultation process was to collect feedback amongst different stakeholders 
on a possible extension of Regulation 924/2009, and allow a wide range of relevant actors 
to provide their view on the issue. Another important objective was to gain an insight into 
first  hand  experiences  by  payment  service  users  with  cross-border  fees,  as  well  as 
collecting technical input from payment service providers.  

Over the course of the consultation period that started end of Q2 2017, different types of 
consultation activities took place. 

  An  Open  Public  Consultation  on  the  transaction  fees  took  place  between  24  July 

2017 and 30 October 2017 (14 weeks).  

  A targeted stakeholder consultation took place by Deloitte, under the framework of 
the  study  commissioned  by  the  European  Commission  to  review  Regulation 
924/2009.  

  A  consultation  amongst  stakeholders  from  the  industry,  including  representatives 
from  different  payment  service  providers  during  the  meeting  of  the  Payment 
Systems Market Expert Group, on 24 October 2017.  

  An  additional  consultation  amongst  representatives  of  Member  States  took  place 
under the framework of the Commission Expert Group on Banking, Payments and 
Insurance, on 17 November 2017 

  The Financial Services User Group (FSUG) could provide input and observations 

in a consultation on 5 December 2017.  

  Separate individual consultations at different events or meetings.  

Public Consultation 

An Open Public Consultation of 14 weeks was launched between 24 of July 2017 and 30 
October  2017.  In  order  to  attract  a  wide  range  of  respondents,  two  questionnaires  were 
made  available.  The  first  questionnaire  was  directed  at  non-experts,  and  provided 
questions  that  were  also  suitable  for  consumers.  The  second  questionnaire  contained 
additional, more specific questions and was aimed at experts in the field.  

The consultation was answered by about 150 respondents. Around    1⁄3 of the respondents 
was  made  up  of  consumers  and  a  little  less  than  2⁄3  of  the  respondents  was  made  up  of 
companies (with a 1⁄3 of the companies or organisations being payment services users, and 
2⁄3  payment  services  providers).  The  consultation  received  a  very  limited  number  of 
responses from public authorities (around 5%).  

The  consultation  received  responses  from  23  different  countries.  Two  responses  came 
from countries outside of the EU: from Norway and the United States of America. A total 
of 41.8% of the respondents were based in non-euro Member States or third countries, and 

61 

 
 
 
 
the  majority  of  the  respondents  was  based  in  the  Euro  area  (58,2%).  Most  respondents 
came from Spain (15,6%), the United Kingdom (13,5%), and Germany (10,6%).   

Results  of  the  Open  Public  Consultation  showed  a  clear  divergence  of  views  between 
payment  services  users  and  payment  service  providers.  The  former  considered  cross-
border  payments  as  expensive  and  not  transparent  and  supported  an  extension  of  the 
Regulation.  The  latter  category  of  payment  services  providers  predominantly  held  the 
opposite view. They regarded cross-border payments as not expensive and transparent and 
suggested leaving the prices of cross-border transactions to market forces. See for example 
the tables below on respondents' perception of transparency and pricing.  

Table  [29]  Respondents'  perception  of  fees  for  making  transactions  from  their 
country to other EU Member states in currencies other than the euro 

Respondent 

All  
Private 
Individuals 
All 
Organisations 
- PSUs 
- PSPs 
National 
Authorities  

Not expensive 
at all (1) 
4,8 
2.2 

Not 
expensive (2) 
8.9 
6.7 

Moderately 
expensive (3) 
13.7 
8.9 

Expensive 
(4) 
15.3 
17.8 

Very 
expensive (5) 
29.0 
44.4 

No 
opinion 
28.2 
20.0 

6.9 

3.1 
10.3 
0.0 

11.1 

9.4 
12.8 
0.0 

16.7 

15.6 
17.9 
14.3 

15.3 

21.9 
10.3 
0.0 

19.4 

37.5 
5.1 
28.6 

30.6 

12.5 
43.6 
57.1 

44% of the respondents indicated that non-euro transactions within the EU are expensive 
to very expensive and 14% indicated they were not expensive.  When looking at payment 
services users, 62% of individuals and 59% of companies indicated that these transactions 
are expensive.  These  figures are somewhat  distorted by the large number of respondents 
that  provided  "no  opinion".  Restricting  the  analysis  to  payment  services  users  that 
expressed  an  opinion  on  the  subject,  nearly  80%  of  individuals  and  67%  of  companies 
classified  these  transactions  as  expensive  or  very  expensive.  National  authorities,  which 
are also payments services users, agreed with this view though their limited representation 
in the answers does not guarantee a robust analysis. 

Table  [30]  Respondents'  perception  of  fees  for  making  transactions  from  their 
country to other EU Member states in currencies other than the euro 

Respondent 

All 
Private 
Individuals 
All 
Organisations 
- PSUs 
- PSPs 
National 
Authorities 

Not 
transparent at 
all (1) 
15.2 
24.4 

9.6 

18.8 
2.5 
14.3 

Not transparent 
(2) 

21.6 
33.3 

16.4 

21.9 
12.5 
28.6 

Moderately 
transparent 
(3) 
15.2 
13.3 

15.1 

25.0 
7.5 
0.0 

Transparent  
(4) 

7.2 
4.4 

8.2 

9.4 
7.5 
14.3 

Very 
transparent 
(5) 
21.6 
6.7 

31.5 

9.4 
50.0 
14.3 

No 
opinion 

19.2 
17.8 

19.2 

15.6 
20.0 
28.6 

For  euro  transactions,  the  picture  is  quite  similar  to  the  previous  one  though  less  people 
answered  this  question,  with  16%  considering  that  euro  transactions  from  non-euro  area 

62 

 
 
 
 
Member States are not expensive and 32% considering they are. When looking at payment 
services users, 48% of individuals and 38% of companies indicated that these transactions 
are expensive. These figures are also distorted by the even larger number of "no opinions" 
form  of  answers.  Restricting  the  analysis  to  payment  services  users  that  expressed  an 
opinion on the subject, nearly 70% of individuals and 56% of companies classified these 
transactions as expensive or very expensive. 

Additionally,  the  Open  Public  Consultation  provided  a  number  of  case  studies  where 
consumers  were  able  to  share  their  experiences  with  cross-border  transactions.  Some 
mentioned that the fees paid could run up to 60% of the transaction they made. This was 
particularly valid for small amounts. An example of such a transaction was a transfer of £ 
20 GBP to a Romanian bank, which cost £ 12 GBP. For larger amounts the percentage of 
the  fee  in  relation  to  the  transfer  often  turned  out  lower.  An  example  of  such  a  transfer 
could be a fee of 20%, where one respondent had to pay € 20 EUR for a transaction of € 
100 EUR from Bulgaria to Germany.  

Payment  service  providers  stated  that  factors  in  these  costs  included  correspondent 
banking fees, currency conversion, access to payment infrastructure and inefficiencies due 
to volume.  

The  full  analysis  of  the  questionnaire  is  provided  in  a  Feedback  Statement  on  the 
Commission's webpage, along with all public responses to the consultation. See:  

  https://ec.europa.eu/info/consultations/finance-2017-cross-border-transactions-

fees_en 

For a full description of the public consultation see: 

  https://ec.europa.eu/info/sites/info/files/2017-cross-border-transactions-fees-

consultation-document_en.pdf 

The Consumer and payment services users' associations survey 

These  figures  are  further  confirmed  by  the  results  of  a  study  contracted  by  the 
European Commission with an external provider. The external provider reached out to 
13  consumer  associations  and  payment  services  users  associations  representing  the 
interests of the wider community of payment services users.  

Regarding  cross-border  transactions,  about  92%  of  the  consumers  occasionally  or 
frequently  complain  about  hidden  costs  related  to  cross-border  transactions.  Only  8% 
indicated that this practice has  never  been  the subject of complains. Respondents further 
indicated  that  the  following  situations  occur,  either  occasionally  or  frequently:  ‘lack  of 
transparency  of  the  actual  payment  fees  for  cross-border  transactions’ (77%),  ‘expensive 
costs  to  withdraw  money  abroad’  (73%),  ‘being  obliged  to  pay  a  fee  for  payment 
transactions within the European Union’ (69%), ‘expensive costs to transfer credit abroad’ 
(64%) and ‘expensive costs to make card payments abroad’ (64%).  

Overall,  according  to  the  respondents,  consumers  are  more  often  complaining  (either 
occasionally or frequently) about practices in relation to their cross-border transactions as 
compared to domestic transactions. 

63 

 
 
 
 
 
The survey also aimed at gathering feedback directly from consumers and representatives 
of  PSU  associations  on  an  extension  of  Regulation  924/2009.  Overall,  60%  of  the 
respondents were in favour of this.   

In  addition,  respondents  were  requested,  according  to  their  knowledge,  to  indicate  the 
potential  consequences  of  an  extension  of  Regulation  924/2009.  According  to  most 
respondents (64%), the main benefit expected from this extension would be that services 
offered for consumers could be better compared. Moreover, for 45% of the respondents, it 
would lead to  greater consumers’  confidence  to explore the market as well as encourage 
citizens to travel/study abroad. In addition, 36% of the respondents think that an extension 
of  the  Regulation  could  encourage  PSPs  to  modernize  payment  systems  to  in  order  to 
lower their internal costs.    

Different  opinions  were  submitted  on  the  possible  impact  of  an  extension  of  the 
Regulation on the fees charged by PSPs. On the one hand, nearly half of all associations’ 
representatives (45% of respondents) believe that this extension would frequently lead to a 
decrease  in  the  fees  charged  by  PSPs.  On  the  other  hand,  18%  of  representatives 
mentioned that this could frequently lead to increased fees charged by PSPs. 

Special Eurobarometer on Financial Products and Services 

These results support the conclusions of a special Eurobarometer survey carried out by the 
TNS  Opinion  &  Social  network  in  the  28  Member  States  of  the  EU  between  9  and  18 
April  2016.  27.969  EU  citizens  from  different  social  and  demographic  categories  were 
interviewed face-to-face at home and in their native language on behalf of DG FISMA57. 

Citizens were questioned on their perceptions of fees charged for transactions in or to EU 
Member States where other currencies are used. While 62% respondents who made one of 
these  transactions  agreed  the  information  on  fees  charged  for  them  is  transparent,  64% 
respondents  who  made  one  of  these  transactions  agreed  the  fees  charged  for  such 
transactions are too high.  

Deloitte Study 

The Commission enlisted the services of Deloitte to evaluate the available options of the 
extension  of  Regulation  924.  This  study  provided  further  insight  in  both  the  business 
models of payment service providers that provide cross-border transactions, as well as the 
experiences of consumers and other payment service users.  

The report fulfilled two main tasks: 

  A data collection across 12 Member States on the fees charged, internal costs and a 
comparison for cross-border and domestic transactions, for internal costs; and  
  A cost-effectiveness analysis of different options available in extending Regulation 

924/2009.  

The  final  report  of  Deloitte  combined  a  different  range  of  methodologies,  including 
qualitative  interviews  with  payment  service  providers,  surveys  amongst  consumer 

57 Special Eurobarometer 446 

64 

 
 
 
 
 
 
                                                            
organisations, and quantitative data collection from public available resources such as the 
fee information documents from banks, or ECB data on payments.   

The final report is available at: https://ec.europa.eu/info/files/180328-study-cross-border-
transaction-fees-extension_en 

Market experts 

The Payment Systems Market Expert Group of the Commission was also consulted on 24 
October 2017.58 Here after is an extract of the minutes of this meeting.  

The  Commission  (DG  FISMA)  presented  the  state  of  play  of  actions  1  and  2  of  the 
Consumer Financial Services action plan. An open public consultation will soon close on 
these issues and a contracted study on cost of cross-border payments and related internal 
costs for banks is close to being finalised. The Commission services are currently looking 
into options and impacts of these options which range from "doing nothing" to suppressing 
the concept of "cross-border" for all transactions within the EU. The results of the public 
consultation,  the  study  as  well  as  targeted  consultations  will  help  finalise  the  work.  On 
DCC,  a  mystery  shopping  study  should  be  launched  around  mid-November  under  DG 
JUST's management and finalized by mid-2018. 

Deloitte then presented the first results of the study conducted for the Commission on the 
extension of Regulation 924/2009 on cross-border transfers. While the differences between 
euro area countries and non-euro area countries for cross-border card payments and cash 
withdrawals are small, there are major differences for cross-border credit transfers which 
do not appear to be coherent with the costs of payment services providers, in particular in 
the case of euro transfers. Deloitte also presented the case of Sweden which has equalised 
the price of cross-border and domestic Swedish krona transfers. 

Members of the PSMEG mainly questioned Deloitte on the data used and the number of 
respondents.  One  member  asked  whether  this  initiative  was  aligned  with  the  Council 
commitment on the UN Sustainable Developments Goal to reduce the price of remittances 
to 3%. Remittances have been looked at in the framework of this work, although they are 
not  covered  by  the  Regulation  which  only  covers  electronic  payments.  The  Commission 
explained that the 3% reference was used as a benchmark when looking at the maximum 
price  of  transfers  within  the  EU.  Indeed,  remittances  between  EU  and  non-EU  countries 
are  costly  manual  cash-to-cash  transactions  for  which  the  EU  committed  to  reach  a 
maximum  cost  of  3%  by  2030.  In  comparison,  transfers  within  the  EU  are  electronic 
transactions that usually do not involve manual intervention. Their costs should certainly 
not exceed this maximum of 3%. 

Member States 

Member  States  were  consulted  in  the  framework  of  the  Commission  Expert  Group  on 
Banking,  Payments  and  Insurance  of  17  November  2017.59  Here  after is  an  extract  from 
the minutes of this meeting.   

58 http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=2287  
59https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-reforms-and-their-
progress/regulatory-process-financial-services/expert-groups-comitology-and-other-committees/expert-
group-banking-payments-and-insurance_en  

65 

 
 
 
 
                                                            
DG  FISMA  provided  an  update  on  the  progress  made  under  Action  1  of  the  Financial 
Services Action Retail Plan. It presented a note that outlined the possible options to extend 
the  scope  of  Regulation  924/2009  which  concerns  the  extension  of  Regulation  924/2009 
and addresses the fees of cross-border payments. The Commission presented the different 
possible  options  under  consideration  that  aim  at  reducing  such  fees.  Additionally,  it 
provided an overview of the preliminary results of the open public consultation.   

Two  non-euro  Member  States  commented  on  the  proposal  indicating  that  they  were  in 
favour of a not-too-strict proposal as they feared that any intervention reducing the cost of 
cross-border  payments  could  have,  as  counter  effect,  the  increase  of  domestic  payments 
prices. Other observations involved the entrance of new service providers onto the market, 
the  unique  structure  of  certain  national  markets,  or  the  importance  of  cheap  domestic 
transactions. It was also noted that non-euro payment service providers might not be able 
to  achieve  an  economy  of  scale  effect,  because  they  would  have  to  deal  with  multiple 
currencies, in contrast to the Euro area members. The ECB stated in response that similar 
concerns  and  arguments  were  raised  prior  to  the  adoption  of  Regulation  2560,  the 
predecessor of Regulation 924, but that the adoption of these regulations led to a reduction 
of inefficiencies in the market and such concerns never materialized.  

The  Commission  responded  that  it  will  study  all  these  possible  impacts  in  an  impact 
assessment, and that the shifting of costs by banks is a risk that will be taken into account.  

It  further  inquired  into  the  possibility  of  accessing  euro  account  in  non-euro  Member 
States. All non-euro countries indicated it is easy and (usually) free to get access to a euro 
account in their jurisdictions.  

Member States were further invited to submit their views in writing but did not submit any 
comment.  

In  addition,  further requests  were  made  towards  Member  States  outside  the  Euro  area  in 
order to better understand the reasons why they had or had not opted-in.  

Market users and Consumers 

On  5  December  2017,  representatives  of  different  market  users  and  consumers 
organisations  were  consulted  through  the  forum  of  the  Financial  Services  User  Group 
(FSUG).60  

The Commission provided an update on the Action Plan on Consumer Financial Services. 
A presentation was provided on the state of play of Action 1, the extension of Regulation 
924.  The  different  options  under  consideration  of  this  impact  assessment  were  briefly 
touched upon.  

Members  were  able  to  provide  their  views  on  the  proposal,  and  ask  questions  to  the 
representatives  of  the  Commission.  The  comments  of  members  revolved  around  the 
differences  between  the  possible  policy  options,  and  the  concern  that  any  lack  of 
conclusive regulation might lead to shifts in charges for consumers.  

Some  members  explicitly  repeated  the  need  to  address  cross-border  transactions.  Other 
questions  concerned  the  timeframe  envisioned  by  the  Commission,  the  possibilities  of 

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-reforms-and-their-

60 
progress/regulatory-process-financial-services/expert-groups-comitology-and-other-committees/financial-
services-user-group-fsug_en 

66 

 
 
                                                            
introducing  the  different  policy  options  in  different  phases,  the  emergence  of  cheap 
alternatives, and innovation of the paying infrastructure.  

Representatives  voiced  their  support  for  the  proposal,  but  general  support  was  voiced  to 
opt for the more ambitious policy options.  

Individual meetings with stakeholders 

Various meetings took place with stakeholders in order for Commission services to better 
understand the processes in place on the market for cross-border transactions in particular 
with infrastructure providers such as EBA clearing or the European Central Bank.  

67 

 
 
 
 
 
3.  ANNEX 3: WHO IS AFFECTED AND HOW? 

3.1. 

Practical implications of the initiative 

Under  the  retained  option  (option  3),  payment  services  providers  will  equalise  fees  of 
cross-border  payments  in  euro  and  domestic  payments  in  the  currency  of  the  Member 
States. The practical implications are limited to a change in the fee tables used by payment 
services providers when invoicing/charging their clients.  

3.2. 

Summary of costs and benefits 

Description 

Reduced fees for cross-
border payments in euro. 

Increased transparency 

I. Overview of Benefits (total for all provisions) – Option 3 

Amount 

Direct benefits 

Comments 

EUR 900 million (61.5% of the maximum 
benefits) coming from the reduced fees for cross-
border payments in euro from non-euro area 
Member States 

Recurrent benefit for payments services 
users – (consumers, SMEs). Corporates not 
covered as benefitting from negotiated fees 
already. 

Not quantifiable. May impact the perception of 
payment services users about fees charged for 
transactions cross-border. May impact the 
number of transactions done as lack of 
transparency cited as an obstacle to cross-border 
payments 

Same beneficiaries. Recurrent 

Equality between euro area 
and non-euro area payment 
services users for cross-
border payments in euro 

Not quantifiable. Better integration of non-euro 
Member States into the Union and with euro area 
Member States.  

Impact on EU society – recurrent.  
Level playing field for EU SMEs. Equality 
between EU citizens 

Low fees for cross-border 
payments 

EU's image – Not quantifiable but similar, though 
on a smaller scale, to the Roaming Regulation 

Indirect benefits 

II. Overview of costs – Preferred option 

Payment Services Users  

Payment Services Providers 

Supervisors 

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

Direct 
costs 

N/A 

N/A 

N/A 

Substantive 
compliance 
costs: EUR 900 
million 

Enforcement costs for 
supervisors: EUR 560.000 for all 
28 MS. First 3 years. 

Indirect 
costs 

N/A 

For PSUs if 
revenue losses 
are rebalanced  

N/A 

N/A 

N/A 

N/A 

Reduced fees 
for cross-
border 
payments 

Increased 
transparency 

Direct 
costs 

Indirect 
costs 

N/A 

N/A 

Administrative 
cost: EUR 1.5 
million for 
adaptation of 
fee 
documentation. 

N/A 

N/A 

Enforcement cost 
from increased 
complaints 
handling: EUR 
700.000 for all 28 
MS. Phasing out on 
3 years 

N/A 

N/A 

N/A 

N/A 

N/A 

N/A 

68 

 
 
 
 
 
 
4.  ANNEX 4: A MARKET ANALYSIS 

4.1.  Electronic transactions within the EU 

Based on the statistics provided by the European Central Bank, the total number of non-
cash payments that take place within the EU is about 120 billion payments a year. Around 
2/3 of these payments are in the euro area, and 1/3 outside the euro area. Card  payments 
(including  cash  withdrawals)  represent  around  half  of  the  total  number  of  payment 
transactions,  followed  by  credit  transfers  for  1/4  and  direct  debits  for  about  1/5  of  this 
total. Cheques still account for a small share of the total number of payments with 2.5%, 
but they are not considered as electronic payments.  

Table 1: non-cash payments in the EU in 2016 (Source: ECB data) 

4.2.  Cross-border electronic transactions from EU Member States 

Cross-border electronic transactions account for a relatively small percentage of the 
number of electronic payments with about 7 billion transactions (around 6% of the 
total  number  of  transactions)  but  represent  a  larger  share  in  value  terms  with  35 
trillion EUR (around 13% of the total values transacted). 

Depending on the type of payment considered, their share in the total number of payments 
or  the  total  value  of  payments  will  vary  largely.  Cross-border  transactions  account  for 
around 2% of the number of credit transfers, 9% of the number of card payments and 3% 
of the cash withdrawals. However, looking at values provides a quite different picture: up 
to  28%  of the  value  of  credit transfers  in  Italy  is cross-border, 35%  of the value of  card 
payments  with  Bulgarian  cards,  or  15%  of  the  value  of  cash  withdrawals  made  with  a 
Swedish  card.  In  the  case  of  credit  transfers,  corporate  payments  and  change  operations 
may  explain  the  relatively  high  values  transferred  per  transaction.  It  is  likely  that  high 
minimum costs of transactions also deter small-value cross-border credit transfers so that 
payment services users will only tend to transfer larger values.  

In  very  few  cases  cross-border  payments  are  rather  marginal  in  the  activity  of  payment 
services users of a given country for a specific type of payment instrument: for instance, 
cross-border  cash  withdrawals  made  by  payment  services  users  holding  an  Italian  card 
only account for 0.21% of the total value of cash withdrawals.   

69 

Non-cash payments and cash withdrawals in the EU (2016 data)Number (million)Value(EUR billion)Number (million)Value(EUR billion)Number (million)Value(EUR billion)Credit transfers        20.500       136.000         10.100       126.500         30.600       262.500 Direct debits        20.000           7.000           5.000           1.600         24.900           8.600 Card payments        36.200           1.600         23.400           1.300         59.600           2.900 E-money, other          3.800           1.200              200           2.000           4.000           3.200 Cheques          2.500           2.800              500              800           3.000           3.600 Total non-cash payments        83.000       148.600         39.200       132.200       122.100       280.800 Cash withdrawals          7.900           1.100           4.400              400         12.300           1.500 Source:ECBPayment means19 euro area Member States + Sweden8 non-euro area Member StatesTOTAL EU 
 
 
 
 
Table 2: cross-border weight in electronic payments (in number of transactions and 
values transacted) – Credit transfers (Source ECB) 

Credit transfers sent from EU Member States 

Weight of cross-border 
payments  

Euro area Member States 

Number of transactions 

Values transacted 

2014 

2015 

2016 

2014 

2015 

2016 

France 

Germany 

Italy 

2,55% 

1,81% 

1,90% 

19,88%  22,73%  22,58% 

2,23% 

2,19% 

2,25% 

20,38%  20,64%  21,81% 

0,71% 

1,14% 

1,34% 

28,50%  27,78%  28,25% 

Non-euro area Member States 

Bulgaria 
Czech Republic61 
Denmark 

UK 

Croatia 

Hungary 
Poland62 
Romania 

Sweden 

0,73% 

0,73% 

1,07% 

12,05%  13,72%  12,96% 

NA 

NA 

NA 

NA 

NA 

NA 

4,10% 

NA 

NA 

NA 

NA 

NA 

NA 

NA 

NA 

2,62% 

NA 

NA 

0,52% 

0,96% 

1,04% 

10,34%  12,27%  11,87% 

0,60% 

0,62% 

0,64% 

8,77% 

9,32% 

7,62% 

NA 

6,84% 

4,18% 

NA 

2,79% 

2,44% 

1,57% 

1,94% 

1,52% 

6,34% 

5,96% 

5,75% 

NA 

NA 

NA 

NA 

NA 

NA 

As  can  be  seen  from  the  table  above  on  credit  transfers,  the  weight  of  cross-border 
payments  though  relatively  marginal  when  looking  at  the  number  of  transactions  is,  in 
reality,  of  a  high  importance  within  the  EU  economy,  with  relatively  larger  values 
transacted on a cross-border dimension, probably largely due to corporate payments. This 
is even truer among euro area Member States where they account for about a quarter of the 
total values transacted. 

Turning  to  card  payments  and  cash  withdrawals,  the  picture  is  very  different  as  the 
discrepancy  between  the  number  of  transactions  and  the  values  transacted  that  exists  for 
credit transfers does not appear in card payments and cash withdrawals. The reason is that 
card transactions are in their vast majority similarly sized retail payments63. Cross-border 
card  payments  account  for  about  9%  of  the  number  of  card  payments  (slightly  higher  in 
non-euro  area  Member  States)  and,  regarding  the  values  transacted,  10%  for  euro  area 
Member States and 14% for non-euro area Member States. Cross-border cash withdrawals 
make  up  for  about  to  2%  to  3%  of  both  the  number  of  transactions  and  the  values 
transacted. One exception is Sweden where the use of cash (and hence cash withdrawals) 
has  strongly  decreased  domestically;  and  as  a  result,  cross-border  volumes  are  very 
significant compared to domestic volumes.  

61  Suspected  statistical  anomaly  as  figures  provided  by  Czech  Republic  for  volumes  and  values  are  not 
coherent with other Member States. 
62 Suspected statistical anomaly as figures provided by Poland for volumes and values are not coherent with 
other Member States. 
63  Commercial  cards  would  be  an  exception,  however  in  Europe  only  4%  of  cards  issued  are  commercial 
cards, responsible for around 8% of the total transactions value. Furthermore, commercial card payments are 
rather similar to consumer card payments most often being used by corporate employees for their business 
travel  expenses.  Gallit:  Inclusion  of  commercial  cards  in  the  EU  draft  legislation  capping  the  interchange 
fees level (https://www.finyear.com/attachment/541346/) 

70 

 
 
 
                                                            
Table 3: cross-border weight in electronic payments (in number of transactions and 
values transacted) – Card payments (Source ECB) 

Weight of cross-border 
payments  

Euro area Member States 

Card payments 
Number of transactions 

Values transacted 

2014 

2015 

2016 

2014 

2015 

2016 

France 

Germany 

Italy 

4,77% 

5,19% 

5,11% 

6,24% 

6,88% 

7,08% 

12,01% 

16,10% 

16,67% 

15,85% 

18,13% 

18,43% 

1,77% 

2,78% 

2,89% 

2,66% 

3,49% 

3,10% 

Non-euro area Member States 

Bulgaria 

Czech Republic 

Denmark 

UK 

Croatia 

Hungary 

Poland 

Romania 

Sweden 

20,40% 

21,46% 

22,95% 

31,30% 

32,74% 

34,78% 

NA 

NA 

NA 

8,81% 

7,43% 

9,39% 

NA 

NA 

NA 

12,79% 

11,67% 

12,52% 

9,98% 

11,40% 

11,16% 

7,05% 

7,52% 

7,56% 

6,20% 

6,12% 

NA 

6,47% 

6,53% 

2,78% 

7,10% 

15,56% 

14,72% 

12,79% 

7,23% 

11,97% 

11,78% 

11,83% 

3,05% 

NA 

7,99% 

8,05% 

11,30% 

11,28% 

12,11% 

20,45% 

20,48% 

20,42% 

2,14% 

5,91% 

6,05% 

4,01% 

8,37% 

7,94% 

Table 4: cross-border weight in electronic payments (in number of transactions and 
values transacted) – Cash withdrawals (Source ECB) 

Weight of cross-border 
payments  

Euro area Member States 

Cash withdrawals 
Number of transactions 

Values transacted 

2014 

2015 

2016 

2014 

2015 

2016 

France 

Germany 

Italy 

2,26% 

1,75% 

7,94% 

2,55% 

2,21% 

8,63% 

Non-euro area Member States 

Bulgaria 

Czech Republic 

Denmark 

UK 

Croatia 

Hungary 

Poland 

Romania 

Sweden 

1,62% 

1,57% 

NA 

NA 

NA 

NA 

1,20% 

1,20% 

1,21% 

1,95% 

NA 

NA 

NA 

NA 

1,19% 

1,27% 

1,63% 

7,53% 

2,49% 

2,33% 

9,61% 

1,81% 

1,57% 

NA 

NA 

NA 

1,30% 

1,38% 

1,68% 

8,66% 

3,30% 

1,97% 

0,34% 

3,81% 

2,47% 

0,21% 

3,26% 

3,19% 

NA 

NA 

NA 

NA 

NA 

NA 

NA 

NA 

1,34% 

1,59% 

2,25% 

1,16% 

1,59% 

2,32% 

3,91% 

2,48% 

0,21% 

3,93% 

2,00% 

NA 

NA 

NA 

1,10% 

1,77% 

2,17% 

NA 

10,45% 

15,16% 

Since  the  number  and  value  of  cross-border  payments  are  not  available  for  several 
Member States, the figures for the respective country groups were estimated based on the 

71 

 
 
 
 
ECB's  aggregate64  cross-border  number  and  value  of  transactions  data  per  payment 
instrument for the EU, while the country group breakdown (for the number and value of 
transactions  separately)  followed  the  country  groups'  share  of  all  electronic  transactions 
(domestic  and  cross-border).  The  results  of  these  estimates  for  the  relevant  payment 
instruments are presented in Table 5 below. 

Table 5: cross-border payments and cash withdrawals in the EU (2016 data) (Source 
ECB and Commission estimates) 

4.3.  The currency of cross-border transactions  

A  major  point  of  interest  in  relation  to  an  extension  of  Regulation  924  is  to  understand 
how these cross-border transactions can be further split as per currency, i.e. what part of 
these  transactions takes place  in  EUR, in  other  EU Member State currencies, or  in other 
non-EU foreign  currencies (USD, CHF and others) in  order to  take stock of transactions 
that today do not benefit from the Regulation.  

There  is  unfortunately  no  public  data  available  on  the  currency  split  of  intra-EU 
transactions (while data exists for extra-EU transactions). However, various sources allow 
Commission services to provide estimates as presented below.  

The  currency  shares  per  each  type  of  payment  instrument  are  based  on  the  following 
assumptions:    

  For  extra-EU  transactions:  Eurostat  data  indicates  that  extra-EU  trade  represents 
36% of EU's global trade65. By contrast, in the study conducted by Deloitte for the 
European Commission, a major EU bank estimated that only 5% (see below) of its 
cross-border transaction were taking place in non-EU currencies. Part of the extra-
EU  trade  however  is  carried  out  in  EU  currencies  (e.g.  when  an  EU  company 
invoices the importer in an EU currency).66 Overall and for the sake of simplicity 

64 The value indicated for cross-border credit transfers is based on ECB data on all transactions (domestic 
plus cross-border) in which the UK accounts for nearly 40% of the total value processed for credit transfers 
across the EU. However, one could challenge the cross-border application of this data as it may be largely 
due to domestic credit transfers and the particularities of the UK domestic market rather than cross-border 
credit transfers. Instead, a more conservative estimate could be used based on GDP or number of businesses 
(as they likely account for a large majority of credit transfers), in which case 70% of the value would come 
from 19 eurozone MS + Sweden, 30% from the 8 non-euro MS, closer to numbers and values provided for 
card payments and cash withdrawals. 
65 http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_goods 
66 If the EU exporter is paid in an EU currency, the final transfer takes place within the EU, hence remains 
under the scope of the regulation.  

72 

Cross-border payments and cash withdrawals in the EU (2016 data)Number (million)Value(EUR billion)Number (million)Value(EUR billion)Number (million)Value(EUR billion)Credit transfers             402         17.615              198         16.385              600         34.000 Card payments          3.280              143           2.120              117           5.400              260 Cash withdrawals             257                37              143                13              400                50 Source:ECB, Commission estimates19 euro area Member States + Sweden8 non-euro area Member StatesTOTAL EUPayment means 
 
 
 
                                                            
and transparency, the share of extra-EU currency transactions is estimated at 10% 
for all payment instruments. 

  The  remaining  90%  consist  of  intra-EU  transactions  and  can  be  further  broken 

down as follows: 

o  As  regards  intra-EU  card  transactions  and  cash  withdrawals,  a  reasonable 
estimate  can  be  deduced  from  tourism  statistics  that  mostly  determine  the 
use  of  cards  across  borders.  Eurostat67  indicates  that  about  80%  of  nights 
spent  by  non-residents  within  the  EU  were  spent  in  the  euro  area,  20% 
outside  the  euro  area.  Applied  to  the  remaining  90%  scope,  the  estimates 
used  for  cross-border  intra  EU  transactions  for  card  payments  and  cash 
withdrawals will be split in 72% in euro and 18% in other EU currencies for 
both country groups. 

o  Finally, as regards credit transfers, various sources can be used: 

 

In  the  study  contracted  by  the  Commission  on  cross-border 
transactions,  responding  banks  all  confirmed  that  the  volume  of 
payments in currencies of EU MS other than the euro, were minor 
in  comparison  to  domestic  payments  and  payments  in  euro.  One 
bank interviewed, operating in a EUR country, stated that, in 2016, 
cross-border  transactions  represent  around  3%  of  their  total 
transactions. Within these 3% of cross-border transactions, around 
82% were performed in EUR, 13% in non-EUR EU currencies and 
5% in non-EU currencies."  

 

In addition, intra-EU trade with euro area Member States represents 
79.5%  of  the  total  intra-EU  trade68.  This  trade  will  materialise 
through cross-border credit transfers in euro.  

  Also,  citizens  and  enterprises  from  non-euro  area  Member  States 
have access to euro accounts which allow them to transact easily in 
euros  from  their  countries  (send  and  receive).  On  the  contrary, 
citizens and enterprises from euro area Member States are not used 
to having accounts in other currencies. This facilitates an increased 
share of euro credit transfers in non-euro Member States. 

  Finally, these data are confirmed by data on billing currencies used 
for extra-EU exports by Member State for manufactured goods. This 
is the currency in which EU enterprises ask to be paid and receive 
credit  transfers  from  outside  the  EU69.  In  2016,  for  non-euro  area 
Member States (UK excluded), the share of EUR billing on average 
was 48%.  

  On  the  basis  of  these  four  pieces  of  information,  the  retained 
hypothesis  for  credit  transfer  will  consider  that  the  90%  intra-EU 
transactions  are  split  between  75%  in  euro  and  15%  non-euro  EU 
currencies.  Within  non-euro  EU  currencies,  considering  that  non-

67 http://ec.europa.eu/eurostat/statistics-explained/index.php/Tourism_statistics 
68 http://ec.europa.eu/eurostat/statistics-explained/index.php/Intra-EU_trade_in_goods_-_recent_trends 
69 Again, if the EU exporter is paid in an EU currency, the final transfer takes place within the EU, hence 
remains under the scope of the regulation. 

73 

 
 
                                                            
euro area businesses are only billing in their local currency in 50% 
of the cases as illustrated before, the divide between local and other 
currencies of the EU will be 6% vs 9%.  

On the basis of the above information, the Commission estimated the keys for the currency 
split for each payment instrument for the two country groups separately. These respective 
repartition  keys  are  indicated  in  the  "Share"  lines  in  table  6  below.  In  the  following,  the 
total  number  and  value  of  cross-border  transactions  (as  per  Table  5  above)  for  each 
payment  instrument  and  for  each  country  group  has  been  divided  among  different 
currencies  following  these  repartition  keys.  Considering  transactions  already  covered 
(intra-EU  euro  transactions  in  19  euro  area  Member  States  plus  Sweden),  or  that  are 
outside of the scope of  the regulation (extra-EU transactions), the table also lays out  the 
relative importance of different currency  transactions in  different country groups (in line 
"Share  of  scope  that  could  be  covered  by  Reg  924"),  that  could  be  identified  with  the 
different options available.  

Table 6 – Cross-border payments and cash withdrawals in the EU per currency 

4.4.  A two-speed market based on a two-speed infrastructure 

The  capacity  of  payment  services  providers  to  provide  efficient  cross-border  payment 
services is strongly related to the availability of clearing and settlement infrastructure in 
the  case  of  credit  transfers.  On  the  one  hand,  euro  payments  benefit  from  standards 
such as SEPA Credit Transfer, SEPA Direct  Debits and the  very recent SEPA Instant 
Credit  transfers  with  EU-wide  clearing  and  settlement  infrastructures  (EBA  Clearing 
and  Target  2)  that  allow  any  bank  of  the  EU  to  reach  any  other  bank  of  the  EU  for 
payments  in  euro.  On  the  other  hand,  non-euro  transfers  are  not  harmonised  (no 
common standard for SEK, BGN, PLN, HUF, etc payments…, no EU wide clearing and 
settlement  infrastructure  in  currencies  that  are  not  the  euro,  manual  processes, 
intermediaries such as correspondent banking…) 

Card  payments  and  cash  withdrawals  on  the  other  hand  already  have  the  same 
infrastructures for all currencies as they make use of the infrastructure and standards 
of the international card schemes to process the transactions across borders.  

74 

Cross-border payments and cash withdrawals in the EU per currency (2016 data)euro intra-EUnon-euro intra-EUextra-EU(USD, CHF…)euro intra-EUlocal currency intra-EUother EU currencies intra-EUextra-EU(USD, CHF…)Number (millions)3026040149121820Value (EUR billion)13209264217611229198314751639Share75%15%10%75%6,0%9,0%10%Number (millions)233358332415550389216Value (EUR billion)10326148402112Share72%18%10%72%018%10%Number (millions)187472610102514Value (EUR billion)27749021Share72%18%10%72%018%10%282269039018051243225013339267417791238598314981652In number of transactions44,09%10,79%6,10%28,20%0,19%6,75%3,90%In value of transactions38,88%7,79%5,19%36,10%2,87%4,37%4,81%Share of scope that could be covered by Reg 924In number of transactionsAlready covered23,49%Out of scope61,41%0,40%14,70%Out of scopeTotal number of transactionsTotal value of transactionsShare of total number of cross-border transactionsCredit transferCard payments19 euro area Member States + Sweden8 non-euro area Member StatesCash withdrawalCurrency split 
 
 
 
Credit transfers (and direct debits) 

To understand the costs a traditional bank PSP faces when a customer transfers money to a 
beneficiary, it is important to understand how many and which intermediaries are involved 
in  such  transaction.  Depending  whether  the  payment  is  processed  in  euro  or  in  other 
currencies of EU MS, three different scenarios are identified and presented below.  

Scenario 1 - Payment processing in euro 

As a cornerstone of the SEPA project, a common European platform, called TARGET 2 
(Trans-European  Automated  Real-time  Gross  settlement  Express  Transfer  system),  for 
euro  payments  in  Europe  was  introduced  in  2008.  TARGET2  is  the  real-time  gross 
settlement  (RTGS)  system  owned  and  operated  by  the  Eurosystem,  facilitating  the 
implementation of the Eurosystem’s monetary policy and supporting the functioning of the 
euro area’s money and capital markets. As such, TARGET2 is used for the settlement of 
central bank operations, interbank transfers and other large-value or urgent euro payments. 
It further functions as the intermediary for euro payments between the bank of the sender 
and the bank of the beneficiary as illustrated in the above figure. 

In addition, payment services providers also have access to STEP2 from EBA Clearing, a 
private  solution  developed  by  the  major  European  banks.  STEP2  is  a  Pan-European 
Automated Clearing House processing mass payments in euro. The platform is one of the 
key clearing and settlement mechanisms in the Single Euro Payments Area, both in terms 
of processing volumes and participating institutions.   

As a cornerstone of the SEPA processing infrastructure, STEP2 today provides full reach 
for  SEPA  Credit  Transfers  and  Direct  Debits  to  over  4,800  payment  service  providers 
across all SEPA countries. Based on discussions with the company, it was confirmed that 
price for a cross-border transaction in euro is the same for all payment services providers, 
whether they are established in the euro area or outside and independent from the volumes 
processed  in  order  to  be  as  inclusive  as  possible.  This  price  is  about  EUR  0.002  per 
transaction.  

Scenario 2 – Payment processing in other currencies of EU MSs: transfer to a client 
with a bank account at the corresponding bank of the initiator’s bank 

The situation is different for intra-EU payments in currencies of EU member states other 
than the euro. There is no common European platform such as TARGET 2 for such non-
EUR payments. Therefore, in order to transfer money in another currency, the bank of the 
initiator needs a partner bank called ‘a correspondent bank’. This bank provides services 
on behalf of its partner bank (i.e. in this case, the bank of the initiator) and can facilitate 
credit  transfers  completed  in  the  correspondent  bank’s  local  currency  (i.e.  a  foreign 
currency  for  the  bank  of  the  initiator).  The  correspondent  bank  has  the  capabilities  to 
process  local  transactions  by  having  access  to  local  clearing  systems.  The  bank  of  the 
initiator does not have such access to the local clearing system as either, they do not have a 
physical presence in the country and/or they do not judge it worth paying for having access 
to the clearing system as the low volumes of transactions do not justify such investment. 

75 

Initiator of the paymentBank of theinitiatorClearing House(Target 2)Beneficiary of the paymentBank of the beneficiary 
 
 
 
The following graph illustrates the parties involved when a customer is transferring money 
to a client that has a bank account at a corresponding bank of the bank of the initiator. In 
this  case,  the  payment  can  be  directly  transferred  from  the  corresponding  bank  to  the 
beneficiary. 

Scenario 3 – Payment processing in other currencies of EU  MS: transfer to a client 
with a bank account that is different from the corresponding bank of the initiator’s 
bank 

The  last  graph  shows  the  parties  involved  when  a  customer  is  transferring  money  to  a 
client  that  does  not  have  a  bank  account  at  the  corresponding  bank.  In  this  case,  the 
corresponding  bank  receives  the  money  amount  from  the  bank  of  the  initiator  and  can 
transfer it to the bank of the beneficiary through the clearing system. 

At  the  same  time,  it  should  be  noted  that  a  large  number  of  banks  in  non-euro  area 
Member States – including the ones that were studied as part of the contracted study – are 
branches or part of a group pertaining to a bank of the euro area that can guarantee access 
to clearing and settlement infrastructures and/or process these payments on behalf of their 
branches.  

These  differences  between  euro  transactions  and  non-euro  transactions  were  further 
confirmed  by  replies  for  the  banking  community  to  the  Open  Public  Consultation  or  the 
Inception  Impact  Assessment.  Association  of  banks  particularly  stressed  the  differences 
from the processing flow perspective between a EUR payment and a EU currency payment 
opposing  the  degree  of  automation  (EUR(SEPA)  payments  –  processed  in  batches,  EU  / 
non-EU  currencies  –  processed  individually),  the  clearing  mechanisms  (EUR  (SEPA) 
payments  –  through  clearing  house  ,  EU  /  non-EU  currencies  –  processed  through 
correspondent banks) and operational costs.  

Card payments and cash withdrawals 

Card payments and cash withdrawals do not follow the same rules as the ones for credit 
transfers. In the study contracted by the Commission on this issue, Deloitte explains that 
"the  system  of  debit/credit  cards  does  not  justify  the  introduction  of  additional  fees  for 
cross  border  usage.  The  system  is  integrated  and  based  on  multilateral  exchange.  The 
justification of a cost differential between a domestic and cross border transaction resides 
in the cost of settlement of position between the banks. Those costs are minimal and won’t 
justify  a  cost  differential.  It  is  also  worth  to  mention  that  the  margin  of  the  financial 
institution  is  composed  of  the  margin  on  the  exchange  of  the  currency.  In  fact  in  most 
countries, there is no concept of cross-border or domestic transactions on cards, only few 
PSPs, especially banks are applying a fee for the usage of the cards in another currency." 

76 

Initiator of the paymentBank of theinitiatorBeneficiary of the paymentCorrespondent bank = Bank of beneficiaryInitiator of the paymentBank of theinitiatorClearing HouseBeneficiary of the paymentBank of the beneficiaryCorrespondent bank 
 
 
 
 
 
While  it  is  possible  that  the  international  card  schemes  of  Visa  and  MasterCard  apply 
slightly  different  scheme  fees  for  domestic  and  cross-border  (intra-EEA)  transactions70, 
and that the processing fees for domestic and cross-border transactions are also different, 
the scale of these differences remain negligible compared to the scale of the fees charged 
to the cardholders and merchants. The absence of such differential between domestic and 
cross-border  card  payments  is  indeed  reflected  in  the  fees  charged  to  consumers  as 
presented in Table 9 where most banks price cross-border card payments at the same level 
as domestic payments. 

As  indicated  in  the  ECB  report  on  card  payments  in  Europe  of  201471,  "over  time,  most 
cards issued under local card schemes became co-branded – that is to say, equipped with 
both  a  domestic  and  an  international  scheme  –  to  allow  for  their  usage  abroad  as  well, 
whereas domestic payments were still made within the local scheme. In the 1990s, former 
international  card  schemes 
eastern  European  countries  often  decided 
immediately,  instead  of  introducing  domestic  schemes  –  not  least  due  to  the  strong 
relevance of international banks in those countries. In those Member States with domestic 
schemes,  particularly  in  smaller  countries,  a  distinct  trend  can  be  observed:  the  local 
legacy schemes are gradually being replaced by card schemes with an EU-wide or even 
global reach." As of today, outside the euro area the only widely used local card scheme 
operates in Denmark. 

to  adopt 

Figure 1: number of local card schemes per country (ECB – 2013) 

Regarding cash withdrawals, the same Deloitte study explains that "the ATM costs linked 
with the cross border transactions are composed of two different aspects:  (1) the cost of 
carry of cash advance while the other bank covers the amount withdrawn by its customers; 
and (2) the transmission of the information, its aggregation and the request for settlement. 
Although  those  have  a  high  level  of  automation,  the  information  costs  exists.  Therefore 
there  is  an  objective  cost  of  withdrawing  cash  outside  of  the  area  of  issuance.  The  first 

70  E.g.  MasterCard  applies  a  0.045%  acquirer  scheme  fee  for  non-euro  intra-EEA  card  transactions 
(https://www.six-payment-services.com/dam/download/scheme-fees/Scheme-Fees-UK.pdf),  and  there  are 
reports 
transactions 
(https://cmspi.com/na/blogs/merchants-set-to-suffer-as-visa-announces-increases-to-european-scheme-fees/) 
71 Card payments in Europe – A renewed focus on SEPA for cards - April 2014 - ECB 

intra-regional 

introducing 

of  Visa 

additional 

premium 

fees 

for 

77 

 
 
 
 
 
                                                            
costs do not apply to EUR withdrawals within the EUR zone, there the fee that should be 
applied  should  be  the  same  as  any  other  domestic  bank.  There  should  not  be  any 
significant difference." 

These two costs exist for both domestic cash withdrawals through an ATM that does not 
belong to the PSP (or its group) and cross-border cash withdrawals. However, the price of 
cross-border cash withdrawal is usually three times the one of a domestic cash withdrawal 
outside the PSPs network, without a solid rationale.  

4.5.  The Swedish case 

As  described  earlier,  when  the  Regulation  2560/2001  (i.e.:  former  version  of  Regulation 
924/2009) on cross-border payments was adopted in December 2001, the possibility was 
given to non-EUR countries of the EU to extend the Regulation to their own currency. The 
European  Commission  received  notification  on  June  28th  2002  that  Sweden  desired  to 
extend the Regulation’s application to its currency, the Swedish Krona. Sweden is the only 
country that decided to extend the Regulation. 

The  legal  framework  for  the  payment  and  settlement  systems  infrastructure  in  Sweden 
includes  the  Act  on  Fees  on  some  Cross-Border  Payments  (‘Lag  om  avgifter  för 
vissagränsöverskridande  betalningar,  2002:598  ’)  which  extends  to  payments  made  in 
Swedish  kronor  (SEK)  the  provisions  on  charges  for  cross-border  payments  in  the 
Regulation (EC) 924/2009 on cross-border payments in the Community.  

In  this  context,  a  desk  research  was  performed  in  September  2017  in  order  to  gather 
insights  about  the  rationale  behind  the  Swedish  government’s  decision  to  extend  the 
Regulation to its currency and the impacts identified. The purpose of this research was to 
support  the  analysis  performed  on  the  potential  consequences  of  the  extension  of  the 
Regulation. The research consisted in gathering the views of payment experts in Deloitte 
Sweden,  the  Riksbank  (Swedish  national  bank),  the  Swedish  Financial  Supervisory 
Authority (SFSA) and the Swedish Ministry of Finance.   

Based  on  these  discussions,  it  was  noted  that  no  formal  studies  have  been  performed  by 
these institutions to assess the real impact of the extension of the Regulation.  

However, the SFSA and the Swedish Ministry of Finance provided information based on 
their  experience  and  personal  reflections.  This  information  has  not  been  confirmed  by 
formal  studies.  The  SFSA  and  the  Swedish  Ministry  of  Finance  indicated  two  main 
reasons  behind  the  decision  by  the  Swedish  government  to  extent  the  Regulation  to  the 
SEK:  

a.  Firstly,  the  Swedish  government  strongly  believed  this  extension  would  benefit  the 
Swedish integration in the European Union.  

b. Secondly, this adoption would put pressure on the Swedish banks to develop payment 
functions  that  are  competitive,  namely  that  are  more  automated/efficient,  thus  benefiting 
consumers and SME businesses.  

The  data  collection  exercise  that  accompanied  this  Impact  Assessment  showed  that 
the  five  Swedish  banks  (major  banks  which  represent  the  bulk  of  the  Swedish 
market) in the sample studied do not charge fees for electronic transfers in SEK and 
in euro.  

78 

 
 
 
Confronting the specific objectives put forward in this Impact Assessment with what was 
achieved by Sweden through the opt-in of Regulation 924, it is considered that:  

1. Scope of transactions and PSUs:  the reduction of fees covers most transactions that 
may come out of Sweden (EUR and SEK). Sweden may also transact cross-border in other 
European currencies but we estimate that the volume and number of transactions will be 
marginal, around 13% of all cross-border transactions. 

2. Transparency of fees: fees are fully transparent for consumers as they are aligned with 
domestic fees. In the case of Sweden, transparency is further increased by the gratuity of 
transactions.  

3. Modernised payments market: the objective of the Swedish government at the time of 
adoption was to put pressure on the Swedish banks to develop payment functions that are 
competitive,  namely  that  are  more  automated/efficient,  thus  benefiting  consumers  and 
SME businesses. While our study has not dug deep into the Swedish infrastructure to link 
recent developments on the Swedish market with the opting-in of Sweden, the country is 
recognised across the EU as among the most innovative payment markets and gave rise to 
companies (including Fintechs) such as Swish, Trustly, SEQR and Tink that have been and 
are changing the way payments are done in the EU.  

4. Difference euro/non-euro area: the fact that Sweden is a non-euro area Member State 
does not put Swedish citizens and enterprises on an un-level playing field with their euro 
area  counterparts.  On  the  contrary,  one  could  even  argue  that  they  are  slightly  favoured 
because they can reach the euro area and one non-euro area Member State (Sweden itself) 
at low cost while the reach of euro area Member States citizens and enterprises is limited 
to the euro area. 

4.6. 

Further  information  on  estimates  used  for  calculations  on  potential 
savings 

Credit transfers average prices are calculated based on the following figures extracted from 
the top 3 to 7 payment services providers of non-euro countries (source Deloitte study for 
EC).  Averages  are  then  weighted  across  countries  based  on  volumes  provided  by  ECB 
statistics.  

Bulgaria 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

UniCredit Bulbank 

DSK Bank 

First Investment Bank 

€bank Bulgaria (Postbank) 

18,92 € 

24,03 € 

15,00 € 

21,99 € 

Average 

19,98 € 

79 

 
 
 
  
 
 
Croatia 

Banks 

Fee for cross-border, euro, outgoing 
10€ 

Average 

In euros 

Zagrebacka banka (UniCredit Group) 
Privredna banka Zagreb (PBZ) (Intesa Sanpaolo 
Group) 

Erste Bank Croatia 

Raiffeisen Bank 

Hrvatska poštanska banka 

5,40 € 

10,80 € 

6,75 € 

10,12 € 

8,10 € 

Czech Republic 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

Česká spořitelna 

Komerční banka 

ČSOB 

UniCredit Bank CZ 

Raiffeisenbank CZ 

8,44 € 

7,48 € 

9,59 € 

9,59 € 

8,44 € 

Denmark 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

Danske Bank 

Nordea Bank Danmark A/S  

Sydbank 

2,69 € 

2,69 € 

2,69 € 

Hungary 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

OTP 

Unicredit 

K&H 

Raiffeisen 

MKB 

PKO BP 

BRE Bank (mBank) 

ING BSK 

BZ WBK 

8,48 € 

4,99 € 

4,62 € 

5,62 € 

Poland 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

1,90 € 

1,19 € 

1,19 € 

1,90 € 

8,23 € 

Average 

8,71 € 

Average 

2,69 € 

Average 

5,93 € 

Average 

1,54 € 

80 

 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
  
 
 
 
 
  
  
 
 
Romania 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

Unicredit Bank 

Raiffeisen Bank 

Banca Transilvania 

BCR 

10,00 € 

10,00 € 

14,90 € 

9,86 € 

Average 

11,19 € 

UK 

Banks 

Fee for cross-border, euro, outgoing 
10€ 
In euros 

Average 

Barclays 

HSBC 

Lloydsbank 

Royal Bank of Scottland 

NationWide 

TescoBank 

Halifax 

5,68 € 

4,55 € 

10,80 € 

11,37 € 

10,23 € 

11,37 € 

10,80 € 

9,26 € 

For  card  payments  and  cash  withdrawals,  such  detailed  information  is  not  available. 
However,  minimum  and  maximum  prices  offered  on  the  market  by  the  same  3  to  7  top 
payments services providers per country were used to approximate the average price, later 
weighted with volumes across countries.  

81 

 
 
 
 
 
  
  
 
 
 
  
  
 
 
 
 
5.  ANNEX 5: DETAILED LEGISLATIVE FRAMEWORK 

Cross-border  payments  are  covered  by  various  EU  laws  in  particular  Regulation 
924/2009 on cross-border payments that repealed Regulation 2560/2001, the Payment 
Services Directives (PSD1 and PSD2), the SEPA Regulation and the Interchange Fee 
Regulation (IF). Overall, all these Regulations and Directives have followed the same 
objectives: creating the conditions for cheap, efficient and secure payments within the 
EU, as the backbone of EU's economy.  

Regulations  2560/2001  and  924/2009  on  cross-border  payments: 
equalisation of cross-border and domestic fees for euro payments.  

imposing 

the 

After  the  introduction  of  the  euro  and  the  disappearance  of  exchange  rates  between 
Member  States  of  the  euro  area,  inefficiencies  and  high  costs  of  cross-border  payments 
became  more  and  more  apparent.  In  2001,  the  Commission  realised  that  previous 
initiatives to facilitate the integration of fragmented European financial markets would not 
necessarily lead to a reduction of costs and an improvement of the service standards in the 
area  of  cross-border  payments.  Consequently,  this  created  obstacles  to  the  proper 
functioning of  the  Internal  Market. For  both  consumers  and  businesses,  this  was  seen  as 
unacceptable,  for  an  area  which  operated  with  one  common  currency.  Therefore,  the 
Commission made a proposal for a Regulation on cross-border payments in euro adopted 
in  December  2001,  one  month  before  physical  euro  coins  and  banknotes  entered  into 
circulation  in  January  2002.  Enforced  in  July  2002,  Regulation  2560/2001  was 
implemented  with  the  objective  of  creating  an  integrated  payment  market  in  the  EU 
against the backdrop of the introduction of the common currency.  

The Regulation was based on Internal Market principles with the objective to ensure that 
there was no discrimination between similar national and cross-border payments in euro. 
Its objectives were overall to:  

  Reduce  the  charges  levied  for  cross-border  payments  to  the  level  of  domestic 
payments by equalising fees charged by PSPs for euro electronic payments within 
Member  States  with  fees  charged  for  cross-border  electronic  payments  between 
Member States. 

  Encourage the financial services industry to make the necessary changes in existing 
cross-border  payment  infrastructures,  as  part  of  the  integration  of  European 
financial  markets.  The  objectives  were  to  lower  costs  and  improve  speed  and 
quality  of  cross-border  payments  in  euro  by  eliminating  barriers  to  automated 
processing  of  payments  (Straight-Through  Processing  or  STP).  This  was  further 
facilitated  by  the  execution  of  cross-border  payments  through  the  use  of  the 
International Bank Account Number (IBAN) and Bank Identifier Code (BIC). 

The  enforcement  of  Regulation  2560/2001  obliged  PSPs  to  charge  the  same  fees  for 
national and cross-border payments in euro, and encouraged the banking industry to create 
EU-wide  infrastructures  in  order  to  cut  the  costs  for  cross-border  payments.  As  a 
consequence,  the  European  Payment  Council  (EPC)  was  established  by  the  banking 
community and a pan-European Clearing House (referred to as ‘STEP 2’) was created and 
started operating in April 2003.  

Regulation  2560/2001  was  one  of  the  first  initiatives  of  the  European  Union  to  create  a 
single European payment area. It was the trigger to a profound modernisation of payment 
systems and processes for euro payments which led to the adoption of the SEPA standards 

82 

 
 
enforced by the SEPA Regulation. The evaluation of Regulations 2560/2001 and 924/2009 
is annexed (Annex 4) to the impact assessment.  

The Single Euro Payments Area (SEPA) Regulation:  a common and unique way to pay in 
euro across the EU.  

The SEPA Regulation (EU) No 260/2012 is another project towards a common European 
payments  market  to  harmonize  payments  and  reach  the  objectives  of  Regulation 
2560/2001  on  cross-border  payments  in  euro  (i.e.  equalisation  of  the  price  of  electronic 
cross-border  payments  in  the  form  of  credit  transfers,  ATM  cash  withdrawals  and  card 
payments).  

The  SEPA  project  was  launched  by  the  European  banking  and  payment  industry 
represented by the EPC. The EPC has designed the SEPA schemes for credit transfers and 
direct  debits.  From  a  legal  viewpoint,  the  Regulation  sets  the  rules  and  a  deadline  in 
February  2014  (later  postponed  to  August  2014)  for  euro  area  countries  to  make  credit 
transfers  and  direct  debits  in  euro  under  the  same  conditions.  Non-euro  area  Member 
States  were  given  two  additional  years  to  adapt  their  payment  infrastructure.  The  legal 
foundation for SEPA is laid out in the Payment Services Directive 2007/64/EC.  

SEPA  harmonises  the  way  retail  electronic  euro  payments  are  made  across  Europe  by 
using  common  procedures  and  standards.  It  allows  European  consumers,  businesses  and 
public  administrations  to  make  and  receive  credit  transfers  and  direct  debits  under  the 
same basic conditions. 

By  1  February  2014,  all  domestic  Automatic  Clearing  Houses  (ACH)  and  direct  debit 
instructions  within  the  Euro  area  had  to  comply  with  the  SEPA  standard.  Moreover, 
similar euro transactions in all other EU Member States and countries of the EEA had to 
be migrated to the SEPA framework. SEPA makes all cross-border electronic payments in 
euro as easy as domestic payments. An end goal is to suppress the current differentiation 
between national and cross-border payments. 

The most important fact for cross-border payments is that these payments can be carried 
out  within  SEPA  under  the  same  conditions  as  domestic  payments.  Within  SEPA,  euro 
payments can be initiated not only through a resident payment services provider (PSP) but 
also  through  PSPs  resident  in  another  country  without  any  additional  fees,  and 
corporations can execute both their domestic and cross-border euro payments via a single 
institution.  

The Payment Services Directives (PSD1 & PSD2): bringing in competition and security  

The  first  Payment  Services  Directive  2007/64/EC  was  adopted  in  2007,  became  law  in 
2009 and will be replaced in January 2018 by PSD2. It provides the legal foundation for an 
EU  single  market  for  payments,  and  to  establish  safer  and  more  innovative  payment 
services across the EU. Entering into force in 2009, the aim of the Directive was to make 
cross-border  payments  as  easy,  efficient  and  secure  as  'national'  payments  within  a 
Member  State.  In  particular,  the  initial  objectives  of  the  payment  Directive  were  to 
establish  a  single  market  supported  by  a  predefined  regulatory  framework  for  payments, 
enhance the payment processing to enable easier and safer cross-border payments, provide 
SEPA with the legal requirements necessary for its implementation, increase customer data 
security with more detailed and transparent information and allow new players to enter the 
market. 

83 

 
 
Since  2007,  this  Directive  has  brought  substantial  benefits  to  the  European  economy, 
easing  access  for  new  market  entrants  and  payment  institutions,  and  offering  more 
competition and choice to consumers. It offered economies of scale and helped SEPA in 
practice.  It  led  to  more  transparency  and  information  for  consumers,  especially  on  the 
execution time and fees; and has reduced execution times, strengthened refund rights, and 
clarified  the  liability  of  consumers  and  payment  institutions.  Another  tangible  benefit  is 
that  payments  are  now  easily  made  throughout  the  whole  EU  and  are  furthermore  much 
faster, as payments are credited to the payment receiver's account within the next business 
day. 

In  July  2013,  the  Commission  proposed  to  modernise  the  PSD  taking  into  account  new 
types  of  payment  services,  such  as  payment  initiation  services.  These  service  providers 
have brought innovation and competition, providing more, and often cheaper, alternatives 
for internet payments; but were previously unregulated. Bringing them within the scope of 
the  PSD  aimed  at  further  boosting  transparency,  innovation  and  security  in  the  single 
market and establishing a level playing field between different payment service providers. 
In  addition,  certain  PSD  rules  were  transposed  or  applied  by  Member  States  in  different 
ways (e.g. the exemptions of a number of payment-related activities).  

The  Second  Payment  Services  Directive  will  be  of  application  as  of  January  2018  and 
updates  and  complements  the  EU  rules  put  in  place  by  the  original  PSD.  Its  main 
objectives are to contribute to a more integrated and efficient European payments market; 
improve  the  level  playing  field  for  payment  service  providers  (including  new  players); 
make payments safer and more secure; protect consumers; and encourage lower prices for 
payments. 

The Interchange Fee Regulation – putting an end to reverse competition in cards  

At  the  same  time  as  PSD2,  the  Commission  adopted  the  Interchange  Fee  Regulation 
2015/751  (IFR)  for card-based payment transactions, which entered into  force on 8 June 
2015  and  has  been  fully  applicable  since  9  June  2016.  The  Regulation  covers  the  most 
widely used debit, credit and prepaid cards issued by payment card schemes and focuses 
on the redistribution of costs of and revenues from such card transactions.  

A key objective of the IFR is to regulate excessive hidden interchange fees and introduce a 
harmonized  approach  at  EU  level.  Interchange  Fees  on  consumer  credit  cards  and 
consumer debit cards have been capped to a maximum of 0.3% and 0.2% of the value of 
the  transaction  respectively.  These  caps  are  based  on  an  estimate  of  the  fee  at  which  a 
merchant would be indifferent between being paid by card or in cash. The introduction of 
maximum fees halted the ongoing reverse competition for higher interchange fees between 
MasterCard  and  Visa,  which  had  led  banks  to  switch  to  the  card  scheme  offering  the 
highest interchange fee policy as that would boost their revenues.   

84 

 
 
 
6.  ANNEX 6: EVALUATION OF REGULATION 924/2009 

The evaluation of the impact of Regulation 924/2009 was undertaken in 2013 and accompanied the 
publication of the PSD2 proposal. As a consequence, a renewed evaluation of the Regulation was 
not conducted in this exercise as observations made in 2013 are still valid.  

The study concludes on various points of interest:  

a. Evolution of prices for cross-border payments 

In  2006,  the  European  Commission  published  a  working  paper  on  the  impact  of  Regulation  EC 
2560/2001  on  bank  charges  for  national  payments.  The  aim  of  this  study  was  to  determine  if 
Regulation  2560/2001  has  led  to  a  reduction  in  banking  prices.  The  average  prices  of  sending 
EUR 100 cross-border in the euro area found by this study, together with our findings from 2012, 
are depicted in Figure 24 below. The sharp drop between fees found in 2003 and 2005 is attributed 
by the authors of the working paper to the introduction of Regulation 2560/2001. 

The previous studies did not differentiate between different methods of transferring funds, such as 
over the counter or online, no doubt also because online payments were of smaller importance at 
the time. We include for 2012 separately the cost of transferring EUR 100 cross-border online and 
over  the  counter.  This  reveals  the  interesting  trend  that  online  transactions  prices  have  further 
fallen  compared  to  the  2005  value,  while  over-the-counter  transactions  have  become  more 
expensive. 

This can be explained firstly by the increased popularity of online banking and secondly by the fact 
that  some  banks  actively  discourage  over-the-counter  payments  in  favour  of  online  payments  as 
these are cheaper for the institution. This was almost universally the case in the Netherlands, for 
example,  where  credit  institutions  charged  significant  fees  for  over-the-counter  transfers  and 
nothing for online transfers. 

The  prices  for  online  transfers  have  almost  universally  dropped,  with  the  exception  of  Belgium 
where we note a small increase from EUR 0.15 to EUR 0.50. There are a number of instances also 
where the over-the-counter fee has fallen: Germany, Greece and Spain. In all other countries the 
over-the-counter  fee  is  higher  than  the  2005  fee  with  the  Netherlands  standing  out  in  particular 
with an increase from zero to EUR 6. 

85 

 
 
 
[Addition to the 2013 report: The study contracted by the EC with Deloitte in 2017 confirms the 
further  decrease  of  prices  for  the  3  euro  Member  States  in  scope.  Prices  collected  for  online 
transfers in France, Germany and Italy were all equal to 0.] 

b. Evolution of Debit card charges 

The  same  Commission  working  paper  also  analysed  the  evolution  of  prices  for  ATM  cash 
withdrawals. The study noted a slight increase in charges between 2001 and 2005 and concluded 
that this increase was likely due to the introduction of Regulation 2560 which required withdrawal 
charges for domestic and cross-border transactions to be identical. 

Looking at the price information we gathered in 2012, we note that this trend did not continue, but 
that, on average, prices in the euro area have remained constant (slight drop from EUR 1.45 to 
EUR 1.42 as shown in Table13 below). At the individual country level, some prices have increased 
and some have fallen. Finland stands out in particular where prices have been raised from zero to 
an  average  of  EUR  1.84.  In  Luxembourg  on  the  contrary,  average  prices  fell  from  EUR  3.00  to 
EUR 1.41. 

[Addition to the 2013 report: The study contracted by the EC with Deloitte in 2017 confirms the 
further  decrease  of  prices  for  the  3  euro  Member  States  in  scope.  Prices  collected  for  debit  card 
charges (card payments and cash withdrawals) in France, Germany and Italy all show that fees are, 
in most cases, equal to 0.] 

c. Conclusion on prices 

The comparison of the 2005 and 2012 fee data shows that in general fees for domestic and cross-
border  credit  transfers  have  decreased  if  one  considers  online  transfers.  For  over-the-counter 
transfers, the picture is mixed with fees actually higher in 2012 than in 2005 in some countries. In 
the case of withdrawals at ATMs using a debit card, fees did not change much from 2005 to 2012 
although there are differences across Member States. 

As  no  fee  data  exist  for  2009,  the  year  when  the  PSD  was  implemented  at  national  level,  it  is 
impossible to determine whether the observed changes between 2005 and 2012 occurred before or 
after the implementation of the PSD. 

The qualitative information gathered through the surveys of stakeholders undertaken for the cur-
rent project suggests that the impact of the PSD on fees and charges for payment services appears 
to be small, ranging from nil for many stakeholders to a small decrease. New charges were also 
mentioned by consumer associations. 

It  is  important  to  note  that  charges  and  fees  had  already  fallen  considerably  by  2005-06  for 
domestic  payments  and  cross-border  payments  in  euro  in  the  euro  area  countries.  Annex  5 
provides  the  results  of  a  detailed  analysis  of  fees  and  charges  for  a  range  of  cross-border 
transactions and the trend in fees and charges over time. 

d. Conclusion on ad valorem fees 

At  the  present  time,  the  pattern  of  usage  of  ad  valorem  fees  and  charges  across  the  EU-27  is 
mixed.  While  in  principle  a  fixed  fee  structure  may  be  more  appropriate  because  the  cost  of 
effecting  a  payment  is  largely  fixed,  it  is  not  obvious  that  a  move  to  a  flat  fee  structure  would 

86 

 
 
 
 
necessary  be  advantageous  for  payment  service  users  which  mainly  make  payments  of  relatively 
small  value.  For example, if,  following the introduction  of a  flat fee, payment  institutions aim to 
keep unchanged the revenues generated by an ad valorem fee, it would significantly increase the 
cost  of  payment  services  for  users  making  small  payments  and  benefit  those  effecting  large 
payments. 

In practice, however, the costs to the consumers of ad valorem charges are large for a variety of 
payment transactions other than small credit transfers. 

However, rather than aiming to regulate the nature and level of fees, the best approach may be to 
ensure robust competition in the provision of payment services by making it easier for consumers 
to switch payment service provider (see discussion in section 5.3) and let such competition drive 
down the overall level of fees and charges. 

e. The application of the Regulation in Sweden (corresponds to Option 1) 

Mirroring the equality of charges in euro area countries for domestic and cross-border payments 
in euros, Member States outside the euro area can impose through national legislation equality of 
charges  for  domestic  payments  in  national  currency  and  cross-border  payments  in  national 
currencies and euros. 

Non-euro  area  Member  States  wishing  to  apply  such  a  policy  have  to  notify  the  European 
Commission  according  to  Article  14  of  Regulation  924.  At  the  present  time,  among  the  Member 
States  outside  the  euro  area  only  Sweden  applies  such  an  equality  of  charges  for  domestic 
payments  and  cross-border  payments  in  Swedish  krona,  and  this  since  2002,  following  the 
adoption of Regulation 2560/2001, the predecessor of Regulation 924. 

On 26 May 2011, Romania notified the Commission that it was applying the equal charges rule to 
cross-border payments in national currency (the lei) and that as of 1 January 2012, cross-border 
payments in lei and in euro should be charged the same as national payments in lei. However, the 
competent  authority,  the  national  banking  association,  and  individual  credit  institutions  have  all 
reported that, at the present time, the equal charges rule was not applied as of July 2012 because 
the  national  implementing  regulation  had  not  yet  been  passed.  [Addition  to  the  2013  report:  In 
January 2018, the case has not evolved] 

At issue is whether the extension  of the equal charge rule to all Member States outside the euro 
area would benefit users. 

In  order  to  address  this  question,  a  number  of  Swedish  stakeholders  (consumer  association, 
competent  authority,  national  banking  association,  and  individual  banks)  were  consulted  on  the 
Swedish  experience.  More  generally,  the  survey  of  competent  authorities  asked  for  views  on  this 
question. 

The equality of charges will yield a direct benefit for users who undertake cross-border payments, 
especially consumers and SMEs who are not in a position to negotiate payment fees and charges 
with  their  payment  service  provider.  The  impact  on  payment  users  not  undertaking  cross-border 
payments  depends  on  the  reaction  of  the  payment  service  providers.  If  they  increase  domestic 
charges (or reduce them by less than would have otherwise been the case), the users undertaking 
only  domestic  payment  transactions  will  be  worse  off  while  those  undertaking a  mix  of  domestic 
and  cross-border  payments  will  be  better-  or  worse-off,  depending  on  the  relative  importance  of 
the two types of payments in their overall volume of payments. 

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In this regard, it is useful to note the observation from the Swedish Consumers' Association which 
says that the impact is positive. Fees have fallen following the entry into force of the rule on equal 
charges.  However,  there  exists  no  analysis  or  study  on  consumers’  satisfaction  with  such  an 
equality  of  charges.  The  Swedish  Financial  Supervisory  Authority  confirmed  that  there  has  been 
no attempt to collect views from the general public on the measures taken. But the authority noted 
that the observed reduction in fees is positive evidence even though earlier surveys on fees showed 
that providers may not change their fees immediately but only over time. 

The  data  on  fees  and  charges  presented  in  Annex  5  shows  that  indeed  the  fees  for  domestic 
payments in Swedish krona and cross-border payments in euro are equal. 

According to the Swedish Bankers Association, banks in Sweden had in practice already applied 
the equality of charges principle for domestic and cross-border payments in Swedish krona even 
though there was no legal requirement to do so before the entry into force of the notification of the 
Swedish government to the European Commission. 

The  Swedish  Bankers  Association  also  notes  that  the  Swedish  banks  feel  that  they  had  a  bad 
experience from this rule. Customers get very confused because they are not aware of the fact that 
transactions  in  Swedish  krona  are  treated  differently  according  to  the  Regulation  in  any  other 
countries but Sweden. The more developed the SEPA regime for euro payments becomes, the more 
discrepancies there are with the offering of SEK payments under Regulation 924/2009. Customers 
do  not  understand  that  the  prerequisites  for  Swedish  krona  and  euro  offerings  under  the 
Regulation are totally different. For example, a Swedish customer making a payment in Swedish 
krona to another EU country expects the lower domestic price to apply (like in the case of cross-
border payments in euro) at both ends, i.e. sending and receiving. However, this is not the case as 
the  lower  price  applies  only  in  Sweden.  From  the  banks’  perspective,  in  the  long  run,  the 
Regulation also implies that payments in Swedish krona have to be subsidised as the infrastructure 
efficiencies built in the EEA for SEPA payments in euro are not in place for other currencies. 

Moreover,  the  national  reporting  and  reporting  for  tax  purposes  for  cross-border  transactions 
within EEA means that, ceteris paribus, the cross-border payments in Swedish krona are not com-
parable to domestic transactions which do not have such requirements. 

According  to  the  Swedish  competent  authority,  the  reduction  in  fees  in  general  only  applied  to 
SHARE  payments,  not  BEN  or  OUR  payments,  as  the  national  payment  system  only  uses  the 
SHARE method. 

Overall,  a  normal  charge  on  cross-border  payment  fell  from  between  50  to  80  SEK  before  the 
implementation of Regulation 924 to currently a typical level of approximately 10 SEK. 

f. Extending the Regulation to other Member States 

The  application  of  the  equality  of  charges  rule  to  domestic  payments  in  national  currencies  of 
countries  outside  the  euro  area  and  cross-border  payments  in  euros  would  most  likely  benefit 
payment  service  users  from  non-euro  area  countries.  A  reduction  in  the  cost  of  cross-border 
transactions will undoubtedly stimulate and  strengthen  the internal market. At issue, however, is 
whether  payment  service  users  who  undertake  only  or  mainly  domestic  payments  would  face 
higher fees which would offset the banks’ income loss arising from the reduction in cross-border 
charges. 

88 

 
 
 
 
That said, the costs and benefits to consumers of extending the provisions of Regulation 924 to a 
Member  State‘s  national  currency  (as  has  been  the  case  for  Sweden  since  2002)  is  difficult  to 
quantify  as  there  are  few  indicators  other  than  convergence  of  charges  to  judge  the  Swedish 
experience. Based on these considerations, the current regime of letting the Member State decide if 
and  when  to  implement  such  an  equal  charges  rule  appears  to  remain  appropriate  as  national 
economic and social considerations can be fully taken into account in this process. 

89