COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE 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

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   EUROPEAN COMMISSION  Brussels, 28.3.2018  SWD(2018) 85 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE 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) 84 final}  
 
 
Executive Summary Sheet 

Impact  assessment  of  amending  Regulation  (EC)  924/2009  to  reduce  the  costs  of  cross-border  in  the 
Community 

A. Need for action 

Why? What is the problem being addressed?  
High costs of cross-border payments (6% of all EU payments) are an impediment to the completion of 
the  Single  Market.  The  problem  has  been  tackled  for  Eurozone  countries  where  cross-border  and 
domestic euro transactions cost the same. By contrast, cross-border payments in currencies other than 
the  euro,  or  in  euro  from  non-euro  countries,  are  subject  to  high  fees  creating  a  two-tier  society  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. These high costs reflect low volumes and a lack of modern infrastructures in 
the  case  of  currencies  other  than  the  euro,  but  also  a  lack  of  competitive  and  regulatory  pressure  on 
payment services providers to pass on the low costs of euro transactions to users in non-euro countries. 

What is this initiative expected to achieve?  
The objective of this initiative 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 is to be 
achieved  through  an  alignment  of  fees  charged  for  cross-border  transactions  with  those  applying  to 
domestic transactions, while  ensuring that  this does  not  result in  increased fees for  other  services. In 
addition,  whenever  a  currency  conversion  takes  place  in  a  cross-border  transaction,  transparency  of 
charges and, where relevant, comparability of options should be ensured for payment services users. 

What is the value added of action at the EU level?  
Non-euro Member States could take the required action themselves, and this is foreseen as options in 
Regulation 924/2009. However, only one Member State ever did so, and there are no signs of others 
following this example. Nor is the problem likely to be resolved in the foreseeable future by non-euro 
countries joining the Eurozone, as had been expected when the principles of Regulation 924/2009 had 
first  been  introduced  in  2001.  The  scenario  for  eliminating  barriers  in  the  Single  Market  linked  to 
cross-border transaction costs thus has not materialised. Action at EU level is therefore necessary.  

B. Solutions 

What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  
As the absence of EU legislation has failed to resolve the problem,  four policy alternatives were 
considered, all of them extending the principle of equalising the costs of domestic transactions in the 
national currency and costs for cross-border transaction:  
(1) in the national currency; 
(2) in the national currency and in euro; 
(3) in euro only; 
(4) in any currency of EU Member States, regardless of where they take place. 
Option  3  is  efficient  as  modern  infrastructures  for  cross-border  payments  in  euro  are  available  to  all 
payment  services  providers  also  in  non-euro  countries.  The  majority  of  cross-border  transactions  in 
non-euro countries are in euro, so option 3 would cover a large share of cross-border transactions. As 
euro  transactions  are  cheap,  there  would  be  a  low  risk  of  increased  fees  for  domestic  transactions  to 

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cross-subsidise expensive cross-border transactions in non-euro currencies. Option 3 is also consistent 
with the longer-term goal of having the euro as common currency for all Member States. Acceptance of 
this option by stakeholders would also be higher than for any other option.  
Who supports which option?  
Payment  services  providers  would  favour  a  status  quo,  but  would  regard  option  3  as  the  most 
acceptable  one,  should  there  be  a  legislative  initiative.  For  payment  services  users,  options  2  and  4 
could  be  more  beneficial,  provided  that  payment  services  providers  don't  raise  other  prices  (account 
management  fees,  currency  conversion  fees)  to  cross-subsidise  expensive  non-euro  cross-border 
transactions.  The  European  Parliament  might  prefer  more  transactions  to  be  included  in  the  scope, 
while Member States can be expected to favour option 3, given that they did not voluntarily implement 
options 1 and 2, as foreseen in the current Regulation 924/2009. 

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
Average prices for cross-border euro transactions in non-euro countries are currently estimated at € 8 
for a credit transfer, € 0.40 for a card payment and € 2.30 for a cash withdrawal. The preferred option 
would bring these prices down to those for domestic local currency transactions averaging € 1, € 0 and 
€ 0.63 respectively. Assuming that the share of euro transactions in total cross-border transactions will 
not decline, payment services users could be expected to save 900 million per year. They would also 
benefit  from  more  transparent  and  less  complex  fee  structures  which  may  lead  to  increased 
competition. The lower costs of cross-border transactions would foster deeper economic integration of 
the  EU  and,  as  a  result,  a  more  productive  and  competitive  economy.  There  could  also  be  political 
benefits,  as  this  initiative  would  be  citizen-friendly  in  a  similar  way  as  the  roaming  regulation  in 
telecoms, albeit with a lesser impact on citizens' lives. 

What are the costs of the preferred option (if any, otherwise main ones)?  
Payment  services  providers  would  lose  an  amount  of  revenues  that  matches  the  savings  realised  by 
users, but these losses may be mitigated in the longer run by increased transaction volumes. Additional 
costs to public authorities (supervisors) linked to the enforcement of the Regulation would be marginal.  
How will businesses, SMEs and micro-enterprises be affected?  
SMEs in the euro area can expect higher demand from non-euro area Member States where high fees 
for cross-border payments are a significant barrier. SMEs in non-euro Member States will be able to 
reach all EU residents and businesses with low-cost payments, instead of the population of their home 
country  only.  Thus,  they  will  be  in  a  better  position  to  compete  in  the  Single  Market.  The  smallest 
SMEs will benefit most, as they cannot negotiate the fees they pay for cross-border payments.  

Will there be significant impacts on national budgets and administrations?  
No significant impact is foreseen on national budgets and administrations. 
Will there be other significant impacts?  
Payment  services  providers  will  see  their  revenue  decrease  upon  implementation  and  as  a  counter-
measure, currency conversion costs could be used by payment services providers to recoup the revenue 
losses as these costs are less known by payment services users and not transparent enough for payment 
services  users  to  measure  them.  The  Payment  Services  Directive  already  imposes  transparency 
requirements  that  should  be  further  detailed  to  be  more  effective.  Considering  the  very  technical 
dimension  of  currency  conversion  in  a  fast  evolving  environment,  the  European  Banking  Authority 
shall  be  tasked  with  defining  Regulatory  Technical  Standards  to  better  frame  currency  conversion 
practices.  

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D. Follow up 

When will the policy be reviewed?  
The policy should be reviewed after three years to check 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.  

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