Article 1 Subject matter and scope
1. This Regulation lays down rules on cross-border payments within the Community, ensuring that charges for cross-border payments within the Community are the same as those for payments in the same currency within a Member State. 2. This Regulation shall apply to cross-border payments, in accordance with the provisions of Directive 2007/64/EC, which are denominated in euro or in the national currencies of the Member States which have notified their decision to extend the application of this Regulation to their national currency, in accordance with Article 14. 3. This Regulation shall not apply to payments made by payment service providers for their own account or on behalf of other payment service providers. 4. Articles 6, 7 and 8 lay down rules regarding direct debit transactions denominated in euro between the payment service providers of the payee and of the payer.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The EU’s Single Market allows people, services, goods and capital to move freely in an economy with an annual Gross Domestic Product of EUR 15 trillion. It offers new opportunities for European businesses and contributes to healthy competition. This leads to more choice, better services and lower prices for over 500 million consumers. A key priority of the Juncker Commission is the creation of a deeper and fairer Single Market. In December 2015, the European Commission presented a Green Paper to consult on the potential of a more integrated market for retail financial services, and the actions needed to achieve this goal. Based on the feedback received from stakeholders and the European Parliament's Report 1 on the Green Paper, the Commission published in March 2017 an Action Plan 2 setting out a strategy to str engthen the Single Market for consumer financial services. Cross-border payments are crucial for the integration of consumer financial services and the EU’s economy. They play an important role in bringing together people and businesses in EU Member States. Restrictions and excessive costs for cross-border payments prevent the completion of the Single Market. Fees for cross-border payments Regulation 924/2009 on cross-border payments equalised, across the EU, fees for cross-border payments in euro within the Union with domestic payments in euro (i.e. payments in euro within the same Member State). Non-euro area Member States, although covered by the Regulation, did not benefit from the effects of that Regulation: in these Member States, domestic payments in euro are either very expensive or simply do not exist. As a consequence, people and businesses in these non-euro area EU Member States pay high fees whenever a payment crosses the border of their country or when people travel and pay abroad. These high costs are an impediment to the completion of the Single Market and create two categories of payment service users in the EU. Non-euro area Member States were given the option to extend Regulation 2560/2001 and its successor Regulation 924/2009 to their national currencies. However, this option was only used by Sweden, which aligned fees for cross-border payments in Swedish krona with fees for domestic payments in Swedish krona. The objective of this proposal is to bring the benefits of Regulation 924/2009 to people and businesses in Member States outside the euro area, and put an end to the high cost of intra-EU cross-border transactions in euro. This high cost acts as a barrier to exchanges between euro area and non-euro area Member States and is detrimental to both areas. People and businesses outside the euro area suffer higher costs to access markets or interact with people in the euro area. This means they cannot trade or compete with their counterparts in the euro area under the same conditions. For example, when a non-euro area business has suppliers located in the euro area, the cost of its input will be higher than it would be for a competitor located in the euro area. Equally, this additional barrier to free movement and trade limits the number of potential clients available to euro area businesses. The tables below illustrate the current situation and the situation after application of the amended Regulation. The proposal does not deal with cross-border transactions in other currencies than euro. CURRENT SITUATION SENDING EUROS FROM … TO … Euro area (+ Sweden) 3 Non-euro area Euro area (+ Sweden) ZERO/LOW FEES HIGH FEES Non-euro area ZERO/LOW FEES FOR THE SENDER HIGH FEES FOR RECEIVER HIGH FEES At present, for example a citizen or company in Bulgaria 4 making a cross-border transfer of EUR 500 to Finland may have to pay up to EUR 24 in fees, whereas a person transferring the same amount to Finland from France would pay nothing, or almost nothing 5 . The person making the payment from France would pay the same amount that he would pay for a domestic transfer within France. AFTER THE AMENDMENTS CONTAINED IN THIS PROPOSAL SENDING EUROS FROM … TO … Euro area (+ Sweden) Non-euro area Euro area (+ Sweden) ZERO/LOW FEES ZERO/LOW FEES Non-euro area ZERO/LOW FEES ZERO/LOW FEES As a result of the amendments contained in this proposal, the citizen or company transferring euros from Bulgaria would also pay nothing — or almost nothing — in this situation. This person or company would pay the same fees for a transfer in euros to Finland that they would pay for a domestic transfer in levs within Bulgaria. Transparency obligations related to currency conversion practices The amendments to Regulation 924/2009 contained in this proposal also establish additional transparency obligations for currency conversion practices in line with Articles 45 and 59 of Directive 2015/2366 on payment services in the internal market. These new transparency obligations are warranted, because consumers in the EU face a lack of transparency whenever they make a payment involving a currency conversion. When a consumer makes a card payment abroad (be it a cash withdrawal at an ATM or a card payment at a point of sale) in a different currency than their home currency, they are often given two choices. The first choice is to pay in their home currency, a service called dynamic currency conversion. This service is offered by dynamic currency conversion providers and the bank of the merchant. The consumer’s second choice is to pay in the local currency using the services of the card scheme and the consumer’s bank (non-dynamic currency conversion or ‘on-network’ conversions). Consumers have been complaining about dynamic currency conversion practices in particular. This is because they consider that they lack the necessary information to make an informed choice. As a result, consumers often unwillingly choose the more expensive currency conversion option. This proposal will enhance transparency for consumers by disclosing the full cost of a cross-border transaction. It will help them compare currency conversion service offers before starting a payment transaction involving a currency conversion. Considering the very technical nature of currency conversion in a fast-changing environment, the European Banking Authority will be tasked with establishing regulatory technical standards to better frame currency conversion practices. The proposal will also establish a temporary cap on currency conversion costs until the transparency measures devised by the European Banking Authority take effect, i.e. at the latest 36 months after the entry into force of the amended Regulation. Once implemented, this proposal will generate significant savings for consumers, while the revenues of some payment service providers may decrease. The proposal will also ensure that currency conversion costs are not used by payment service providers to compensate for reduced revenues through increased non-transparent margins on currency conversion, as these costs are usually not known by payment service users. Consistency with existing policy provisions in the policy area Since the introduction of the euro, the European Union has launched various initiatives to significantly reduce the cost of cross-border transactions. The three most important such initiatives are listed below. - The introduction of a set of single euro payments area (SEPA) standards for euro transactions, including single euro payments area credit transfers and single euro payments area direct debits. - The Payment Services Directives (Directive 2007/64/EC, replaced by Directive (EU) 2015/2366) increased the transparency of fees and facilitated the entry of new players in the market. This contributed to greater competition in payments, including cross-border payments, 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 also contributed by equalising fees for cross-border and national payments in euro within the EU. 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.
Revised version (Article 1 Subject matter and scope):
1. This Regulation lays down rules on cross-border payments and on the transparency of currency conversion charges within the Union. 2. This Regulation shall apply to cross-border payments, in accordance with the provisions of Directive 2007/64/EC, which are denominated in euro or in the national currencies of the Member States which have notified their decision to extend the application of this Regulation to their national currency, in accordance with Article 14. Notwithstanding the first subparagraph of this paragraph, Articles 3a and 3b shall apply to national and cross-border payments that are denominated either in euro or in a national currency of a Member State other than the euro and that involve a currency conversion service. 3. This Regulation shall not apply to payments made by payment service providers for their own account or on behalf of other payment service providers. 4. Articles 6, 7 and 8 lay down rules regarding direct debit transactions denominated in euro between the payment service providers of the payee and of the payer.
Article 2 Definitions
For the purposes of this Regulation, the following definitions shall apply: 1. ‘cross-border payment’ means an electronically processed payment transaction initiated by a payer or by or through a payee where the payer’s payment service provider and the payee’s payment service provider are located in different Member States; 2. ‘national payment’ means an electronically processed payment transaction initiated by a payer, or by or through a payee, where the payer’s payment service provider and the payee’s payment service provider are located in the same Member State; 3. ‘payer’ means a natural or legal person who holds a payment account and allows a payment order from that payment account, or, where there is no payment account, a natural or legal person who gives a payment order; 4. ‘payee’ means a natural or legal person who is the intended recipient of funds which have been the subject of a payment transaction; 5. ‘payment service provider’ means any of the categories of legal person referred to in Article 1(1) of Directive 2007/64/EC and the natural or legal persons referred to in Article 26 of that Directive, but excludes those institutions listed in Article 2 of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions ( 1 ) benefiting from a Member State waiver exercised under Article 2(3) of Directive 2007/64/EC; 6. ‘payment service user’ means a natural or legal person making use of a payment service in the capacity of either payer or payee, or both; 7. ‘payment transaction’ means an act, initiated by a payer or by or through a payee, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee; 8. ‘payment order’ means an instruction by a payer or payee to his payment service provider requesting the execution of a payment transaction; 9. ‘charge’ means a charge levied by a payment service provider on the payment service user and directly or indirectly linked to a payment transaction; 10. ‘funds’ means banknotes and coins, scriptural money and electronic money as defined in Article 2(2) of Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions ( 2 ); 11. ‘consumer’ means a natural person acting for purposes other than his or her trade, business or profession; 12. ‘micro-enterprise’ means an enterprise, which, at the time of conclusion of the payment service contract, is an enterprise, as defined in Article 1 and Article 2(1) and (3) of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises ( 3 ); 13. ‘interchange fee’ means a fee paid between the payment service providers of the payer and of the payee for each direct debit transaction; 14. ‘direct debit’ means a payment service for debiting a payer’s payment account, where a payment transaction is initiated by the payee on the basis of the payer’s consent given to the payee, to the payee’s payment service provider or to the payer’s own payment service provider; 15. ‘direct debit scheme’ means a common set of rules, practices and standards agreed between payment service providers for the execution of direct debit transactions.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The EU’s Single Market allows people, services, goods and capital to move freely in an economy with an annual Gross Domestic Product of EUR 15 trillion. It offers new opportunities for European businesses and contributes to healthy competition. This leads to more choice, better services and lower prices for over 500 million consumers. A key priority of the Juncker Commission is the creation of a deeper and fairer Single Market. In December 2015, the European Commission presented a Green Paper to consult on the potential of a more integrated market for retail financial services, and the actions needed to achieve this goal. Based on the feedback received from stakeholders and the European Parliament's Report 1 on the Green Paper, the Commission published in March 2017 an Action Plan 2 setting out a strategy to str engthen the Single Market for consumer financial services. Cross-border payments are crucial for the integration of consumer financial services and the EU’s economy. They play an important role in bringing together people and businesses in EU Member States. Restrictions and excessive costs for cross-border payments prevent the completion of the Single Market. Fees for cross-border payments Regulation 924/2009 on cross-border payments equalised, across the EU, fees for cross-border payments in euro within the Union with domestic payments in euro (i.e. payments in euro within the same Member State). Non-euro area Member States, although covered by the Regulation, did not benefit from the effects of that Regulation: in these Member States, domestic payments in euro are either very expensive or simply do not exist. As a consequence, people and businesses in these non-euro area EU Member States pay high fees whenever a payment crosses the border of their country or when people travel and pay abroad. These high costs are an impediment to the completion of the Single Market and create two categories of payment service users in the EU. Non-euro area Member States were given the option to extend Regulation 2560/2001 and its successor Regulation 924/2009 to their national currencies. However, this option was only used by Sweden, which aligned fees for cross-border payments in Swedish krona with fees for domestic payments in Swedish krona. The objective of this proposal is to bring the benefits of Regulation 924/2009 to people and businesses in Member States outside the euro area, and put an end to the high cost of intra-EU cross-border transactions in euro. This high cost acts as a barrier to exchanges between euro area and non-euro area Member States and is detrimental to both areas. People and businesses outside the euro area suffer higher costs to access markets or interact with people in the euro area. This means they cannot trade or compete with their counterparts in the euro area under the same conditions. For example, when a non-euro area business has suppliers located in the euro area, the cost of its input will be higher than it would be for a competitor located in the euro area. Equally, this additional barrier to free movement and trade limits the number of potential clients available to euro area businesses. The tables below illustrate the current situation and the situation after application of the amended Regulation. The proposal does not deal with cross-border transactions in other currencies than euro. CURRENT SITUATION SENDING EUROS FROM … TO … Euro area (+ Sweden) 3 Non-euro area Euro area (+ Sweden) ZERO/LOW FEES HIGH FEES Non-euro area ZERO/LOW FEES FOR THE SENDER HIGH FEES FOR RECEIVER HIGH FEES At present, for example a citizen or company in Bulgaria 4 making a cross-border transfer of EUR 500 to Finland may have to pay up to EUR 24 in fees, whereas a person transferring the same amount to Finland from France would pay nothing, or almost nothing 5 . The person making the payment from France would pay the same amount that he would pay for a domestic transfer within France. AFTER THE AMENDMENTS CONTAINED IN THIS PROPOSAL SENDING EUROS FROM … TO … Euro area (+ Sweden) Non-euro area Euro area (+ Sweden) ZERO/LOW FEES ZERO/LOW FEES Non-euro area ZERO/LOW FEES ZERO/LOW FEES As a result of the amendments contained in this proposal, the citizen or company transferring euros from Bulgaria would also pay nothing — or almost nothing — in this situation. This person or company would pay the same fees for a transfer in euros to Finland that they would pay for a domestic transfer in levs within Bulgaria. Transparency obligations related to currency conversion practices The amendments to Regulation 924/2009 contained in this proposal also establish additional transparency obligations for currency conversion practices in line with Articles 45 and 59 of Directive 2015/2366 on payment services in the internal market. These new transparency obligations are warranted, because consumers in the EU face a lack of transparency whenever they make a payment involving a currency conversion. When a consumer makes a card payment abroad (be it a cash withdrawal at an ATM or a card payment at a point of sale) in a different currency than their home currency, they are often given two choices. The first choice is to pay in their home currency, a service called dynamic currency conversion. This service is offered by dynamic currency conversion providers and the bank of the merchant. The consumer’s second choice is to pay in the local currency using the services of the card scheme and the consumer’s bank (non-dynamic currency conversion or ‘on-network’ conversions). Consumers have been complaining about dynamic currency conversion practices in particular. This is because they consider that they lack the necessary information to make an informed choice. As a result, consumers often unwillingly choose the more expensive currency conversion option. This proposal will enhance transparency for consumers by disclosing the full cost of a cross-border transaction. It will help them compare currency conversion service offers before starting a payment transaction involving a currency conversion. Considering the very technical nature of currency conversion in a fast-changing environment, the European Banking Authority will be tasked with establishing regulatory technical standards to better frame currency conversion practices. The proposal will also establish a temporary cap on currency conversion costs until the transparency measures devised by the European Banking Authority take effect, i.e. at the latest 36 months after the entry into force of the amended Regulation. Once implemented, this proposal will generate significant savings for consumers, while the revenues of some payment service providers may decrease. The proposal will also ensure that currency conversion costs are not used by payment service providers to compensate for reduced revenues through increased non-transparent margins on currency conversion, as these costs are usually not known by payment service users. Consistency with existing policy provisions in the policy area Since the introduction of the euro, the European Union has launched various initiatives to significantly reduce the cost of cross-border transactions. The three most important such initiatives are listed below. - The introduction of a set of single euro payments area (SEPA) standards for euro transactions, including single euro payments area credit transfers and single euro payments area direct debits. - The Payment Services Directives (Directive 2007/64/EC, replaced by Directive (EU) 2015/2366) increased the transparency of fees and facilitated the entry of new players in the market. This contributed to greater competition in payments, including cross-border payments, 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 also contributed by equalising fees for cross-border and national payments in euro within the EU. 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.
Revised version (Article 2 Definitions):
For the purposes of this Regulation, the following definitions shall apply: 1. ‘cross-border payment’ means an electronically processed payment transaction initiated by a payer or by or through a payee where the payer’s payment service provider and the payee’s payment service provider are located in different Member States; 2. ‘national payment’ means an electronically processed payment transaction initiated by a payer, or by or through a payee, where the payer’s payment service provider and the payee’s payment service provider are located in the same Member State; 3. ‘payer’ means a natural or legal person who holds a payment account and allows a payment order from that payment account, or, where there is no payment account, a natural or legal person who gives a payment order; 4. ‘payee’ means a natural or legal person who is the intended recipient of funds which have been the subject of a payment transaction; 5. ‘payment service provider’ means any of the categories of legal person referred to in Article 1(1) of Directive 2007/64/EC and the natural or legal persons referred to in Article 26 of that Directive, but excludes those institutions listed in Article 2 of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions ( 1 ) benefiting from a Member State waiver exercised under Article 2(3) of Directive 2007/64/EC; 6. ‘payment service user’ means a natural or legal person making use of a payment service in the capacity of either payer or payee, or both; 7. ‘payment transaction’ means an act, initiated by a payer or by or through a payee, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and the payee; 8. ‘payment order’ means an instruction by a payer or payee to his payment service provider requesting the execution of a payment transaction; 9. ‘charge’ means any amount levied on a payment service user by a payment service provider that is directly or indirectly linked to a payment transaction, any amount levied on a payment service user by a payment service provider or a party providing currency conversion services in accordance with Article 59(2) of Directive (EU) 2015/2366 of the European Parliament and of the Council ( 2 ) for a currency conversion service, or a combination thereof; 10. ‘funds’ means banknotes and coins, scriptural money and electronic money as defined in Article 2(2) of Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions ( 3 ); 11. ‘consumer’ means a natural person acting for purposes other than his or her trade, business or profession; 12. ‘micro-enterprise’ means an enterprise, which, at the time of conclusion of the payment service contract, is an enterprise, as defined in Article 1 and Article 2(1) and (3) of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises ( 4 ); 13. ‘interchange fee’ means a fee paid between the payment service providers of the payer and of the payee for each direct debit transaction; 14. ‘direct debit’ means a payment service for debiting a payer’s payment account, where a payment transaction is initiated by the payee on the basis of the payer’s consent given to the payee, to the payee’s payment service provider or to the payer’s own payment service provider; 15. ‘direct debit scheme’ means a common set of rules, practices and standards agreed between payment service providers for the execution of direct debit transactions.
Article 3 Charges for cross-border payments and corresponding national payments
1. Charges levied by a payment service provider on a payment service user in respect of cross-border payments shall be the same as the charges levied by that payment service provider on payment service users for corresponding national payments of the same value and in the same currency. 2. When assessing, for the purpose of complying with paragraph 1, the level of charges for a cross-border payment, a payment service provider shall identify the corresponding national payment. The competent authorities shall issue guidelines to identify corresponding national payments where they consider it necessary to do so. The competent authorities shall actively cooperate within the Payments Committee established in accordance with Article 85(1) of Directive 2007/64/EC to ensure the consistency of guidelines for corresponding national payments. 3. Where a Member State has notified its decision to extend the application of this Regulation to its national currency in accordance with Article 14, a national payment that is denominated in the currency of that Member State may be considered as corresponding to a cross-border payment that is denominated in euro. 4. This Regulation shall not apply to currency conversion charges.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The EU’s Single Market allows people, services, goods and capital to move freely in an economy with an annual Gross Domestic Product of EUR 15 trillion. It offers new opportunities for European businesses and contributes to healthy competition. This leads to more choice, better services and lower prices for over 500 million consumers. A key priority of the Juncker Commission is the creation of a deeper and fairer Single Market. In December 2015, the European Commission presented a Green Paper to consult on the potential of a more integrated market for retail financial services, and the actions needed to achieve this goal. Based on the feedback received from stakeholders and the European Parliament's Report 1 on the Green Paper, the Commission published in March 2017 an Action Plan 2 setting out a strategy to str engthen the Single Market for consumer financial services. Cross-border payments are crucial for the integration of consumer financial services and the EU’s economy. They play an important role in bringing together people and businesses in EU Member States. Restrictions and excessive costs for cross-border payments prevent the completion of the Single Market. Fees for cross-border payments Regulation 924/2009 on cross-border payments equalised, across the EU, fees for cross-border payments in euro within the Union with domestic payments in euro (i.e. payments in euro within the same Member State). Non-euro area Member States, although covered by the Regulation, did not benefit from the effects of that Regulation: in these Member States, domestic payments in euro are either very expensive or simply do not exist. As a consequence, people and businesses in these non-euro area EU Member States pay high fees whenever a payment crosses the border of their country or when people travel and pay abroad. These high costs are an impediment to the completion of the Single Market and create two categories of payment service users in the EU. Non-euro area Member States were given the option to extend Regulation 2560/2001 and its successor Regulation 924/2009 to their national currencies. However, this option was only used by Sweden, which aligned fees for cross-border payments in Swedish krona with fees for domestic payments in Swedish krona. The objective of this proposal is to bring the benefits of Regulation 924/2009 to people and businesses in Member States outside the euro area, and put an end to the high cost of intra-EU cross-border transactions in euro. This high cost acts as a barrier to exchanges between euro area and non-euro area Member States and is detrimental to both areas. People and businesses outside the euro area suffer higher costs to access markets or interact with people in the euro area. This means they cannot trade or compete with their counterparts in the euro area under the same conditions. For example, when a non-euro area business has suppliers located in the euro area, the cost of its input will be higher than it would be for a competitor located in the euro area. Equally, this additional barrier to free movement and trade limits the number of potential clients available to euro area businesses. The tables below illustrate the current situation and the situation after application of the amended Regulation. The proposal does not deal with cross-border transactions in other currencies than euro. CURRENT SITUATION SENDING EUROS FROM … TO … Euro area (+ Sweden) 3 Non-euro area Euro area (+ Sweden) ZERO/LOW FEES HIGH FEES Non-euro area ZERO/LOW FEES FOR THE SENDER HIGH FEES FOR RECEIVER HIGH FEES At present, for example a citizen or company in Bulgaria 4 making a cross-border transfer of EUR 500 to Finland may have to pay up to EUR 24 in fees, whereas a person transferring the same amount to Finland from France would pay nothing, or almost nothing 5 . The person making the payment from France would pay the same amount that he would pay for a domestic transfer within France. AFTER THE AMENDMENTS CONTAINED IN THIS PROPOSAL SENDING EUROS FROM … TO … Euro area (+ Sweden) Non-euro area Euro area (+ Sweden) ZERO/LOW FEES ZERO/LOW FEES Non-euro area ZERO/LOW FEES ZERO/LOW FEES As a result of the amendments contained in this proposal, the citizen or company transferring euros from Bulgaria would also pay nothing — or almost nothing — in this situation. This person or company would pay the same fees for a transfer in euros to Finland that they would pay for a domestic transfer in levs within Bulgaria. Transparency obligations related to currency conversion practices The amendments to Regulation 924/2009 contained in this proposal also establish additional transparency obligations for currency conversion practices in line with Articles 45 and 59 of Directive 2015/2366 on payment services in the internal market. These new transparency obligations are warranted, because consumers in the EU face a lack of transparency whenever they make a payment involving a currency conversion. When a consumer makes a card payment abroad (be it a cash withdrawal at an ATM or a card payment at a point of sale) in a different currency than their home currency, they are often given two choices. The first choice is to pay in their home currency, a service called dynamic currency conversion. This service is offered by dynamic currency conversion providers and the bank of the merchant. The consumer’s second choice is to pay in the local currency using the services of the card scheme and the consumer’s bank (non-dynamic currency conversion or ‘on-network’ conversions). Consumers have been complaining about dynamic currency conversion practices in particular. This is because they consider that they lack the necessary information to make an informed choice. As a result, consumers often unwillingly choose the more expensive currency conversion option. This proposal will enhance transparency for consumers by disclosing the full cost of a cross-border transaction. It will help them compare currency conversion service offers before starting a payment transaction involving a currency conversion. Considering the very technical nature of currency conversion in a fast-changing environment, the European Banking Authority will be tasked with establishing regulatory technical standards to better frame currency conversion practices. The proposal will also establish a temporary cap on currency conversion costs until the transparency measures devised by the European Banking Authority take effect, i.e. at the latest 36 months after the entry into force of the amended Regulation. Once implemented, this proposal will generate significant savings for consumers, while the revenues of some payment service providers may decrease. The proposal will also ensure that currency conversion costs are not used by payment service providers to compensate for reduced revenues through increased non-transparent margins on currency conversion, as these costs are usually not known by payment service users. Consistency with existing policy provisions in the policy area Since the introduction of the euro, the European Union has launched various initiatives to significantly reduce the cost of cross-border transactions. The three most important such initiatives are listed below. - The introduction of a set of single euro payments area (SEPA) standards for euro transactions, including single euro payments area credit transfers and single euro payments area direct debits. - The Payment Services Directives (Directive 2007/64/EC, replaced by Directive (EU) 2015/2366) increased the transparency of fees and facilitated the entry of new players in the market. This contributed to greater competition in payments, including cross-border payments, 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 also contributed by equalising fees for cross-border and national payments in euro within the EU. 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.
Revised version (Article 3 Charges for cross-border payments and corresponding national payments):
1. Charges levied by a payment service provider on a payment service user in respect of cross-border payments in euro shall be the same as the charges levied by that payment service provider for corresponding national payments of the same value in the national currency of the Member State in which the payment service provider of the payment service user is located. 1a. Charges levied by a payment service provider on a payment service user in respect of cross-border payments in the national currency of a Member State that has notified its decision to extend the application of this Regulation to its national currency in accordance with Article 14 shall be the same as the charges levied by that payment service provider on payment service users for corresponding national payments of the same value and in the same currency. 2. When assessing, for the purpose of complying with paragraph 1, the level of charges for a cross-border payment, a payment service provider shall identify the corresponding national payment. The competent authorities shall issue guidelines to identify corresponding national payments where they consider it necessary to do so. The competent authorities shall actively cooperate within the Payments Committee established in accordance with Article 85(1) of Directive 2007/64/EC to ensure the consistency of guidelines for corresponding national payments. 4. Paragraphs 1 and 1a shall not apply to currency conversion charges.
Article 4 Measures for facilitating the automation of payments
1. A payment service provider shall, where applicable, communicate to the payment service user the payment service user’s IBAN and the payment service provider’s BIC. In addition, where applicable, a payment service provider shall indicate the payment service user’s IBAN and the payment service provider’s BIC on statements of account, or in an annex thereto. A payment service provider shall provide the information required under this paragraph to the payment service user free of charge. 3. The payment service provider may levy charges additional to those levied in accordance with Article 3(1) on the payment service user where that user instructs the payment service provider to execute the cross-border payment without communicating IBAN and, where appropriate and in accordance with Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009 ( 4 ), the related BIC for the payment account in the other Member State. Those charges shall be appropriate and in line with the costs. They shall be agreed between the payment service provider and the payment service user. The payment service provider shall inform the payment service user of the amount of the additional charges in good time before the payment service user is bound by such an agreement. 4. Where appropriate, with regard to the nature of the payment transaction concerned, for all invoicing of goods and services in the Community, a supplier of goods and services that accepts payments covered by this Regulation shall communicate its IBAN and the BIC of its payment service provider to its customers.
Article 5 Balance of payments reporting obligations
1. With effect from 1 February 2016, Member States shall remove settlement-based national reporting obligations on payment service providers for balance of payments statistics relating to payment transactions of their customers. 2. Without prejudice to paragraph 1, Member States may continue to collect aggregated data or other relevant readily available information, provided that such collection has no impact on the straight through processing of the payments and can be fully automated by payment service providers.
Article 6 Interchange fee for cross-border direct debit transactions
In the absence of any bilateral agreement between the payment service providers of the payee and of the payer, a multilateral interchange fee of EUR 0,088, payable by the payment service provider of the payee to the payment service provider of the payer, shall apply for each cross-border direct debit transaction executed before 1 November 2012, unless a lower multilateral interchange fee has been agreed upon between the payment service providers concerned.
Article 7 Interchange fee for national direct debit transactions
1. Without prejudice to paragraphs 2 and 3, where a multilateral interchange fee or other agreed remuneration for a national direct debit transaction executed before 1 November 2009 applies between the payment service providers of the payee and of the payer, such a multilateral interchange fee or other agreed remuneration shall apply for any national direct debit transaction executed before 1 February 2017 . 2. Where such a multilateral interchange fee or other agreed remuneration is reduced or abolished before 1 February 2017 , such reduction or abolition shall apply to any national direct debit transactions executed before that date. 3. In the event of a bilateral agreement between the payment service providers of the payee and of the payer for a national direct debit transaction, paragraphs 1 and 2 shall not apply where that national direct debit transaction was executed before 1 February 2017 .
Article 9 Competent authorities
Member States shall designate the competent authorities responsible for ensuring compliance with this Regulation. Member States shall notify the Commission of those competent authorities by 29 April 2010. They shall notify the Commission without delay of any subsequent change concerning those authorities. Member States may designate existing bodies to act as competent authorities. Member States shall require the competent authorities to monitor compliance with this Regulation effectively and take all necessary measures to ensure such compliance.
Article 10 Complaint procedures for alleged infringements of this Regulation
1. Member States shall establish procedures which allow payment service users and other interested parties to submit complaints to the competent authorities with regard to alleged infringements of this Regulation by payment service providers. Member States may use or extend existing procedures for that purpose. 2. Where appropriate, and without prejudice to the right to bring proceedings before a court in accordance with national procedural law, the competent authorities shall inform the party that has submitted a complaint of the existence of the out-of-court complaint and redress procedures established in accordance with Article 11.
Article 11 Out-of-court complaint and redress procedures
1. Member States shall establish adequate and effective out-of-court complaint and redress procedures for the settlement of disputes concerning rights and obligations arising under this Regulation between payment service users and their payment service providers. For those purposes, Member States shall designate existing bodies, where appropriate, or establish new bodies. 2. Member States shall notify the Commission of those bodies by 29 April 2010. They shall notify the Commission without delay of any subsequent change concerning those bodies. 3. Member States may provide that this Article applies only to payment service users which are consumers or micro-enterprises. In such event Member States shall inform the Commission accordingly.
Article 12 Cross-border cooperation
The competent authorities and the bodies responsible for out-of-court complaint and redress procedures of the different Member States, referred to in Articles 9 and 11, shall actively and expeditiously cooperate in solving cross-border disputes. Member States shall ensure that such cooperation takes place.
Article 13 Penalties
Without prejudice to Article 17, Member States shall, by 1 June 2010, lay down rules on the penalties applicable to infringements to this Regulation and shall take all measures necessary to ensure that they are implemented. Such penalties shall be effective, proportionate and dissuasive. Member States shall notify those provisions to the Commission by 29 October 2010 and shall notify it without delay of any subsequent amendment affecting them.
Article 14 Application to currencies other than the euro
1. A Member State that does not have the euro as its currency and that decides to extend the application of this Regulation, with the exception of Articles 6, 7 and 8, to its national currency shall notify the Commission accordingly. That notification shall be published in the Official Journal of the European Union . The extended application of this Regulation shall take effect 14 days after such publication. 2. A Member State that does not have the euro as its currency and that decides to extend the application of Article 6, 7 or 8, or any combination thereof, to its national currency shall notify the Commission accordingly. That notification shall be published in the Official Journal of the European Union . The extended application of Article 6, 7 or 8 shall take effect 14 days after such publication. 3. Member States which, on 29 October 2009, have already complied with the notification procedure pursuant to Article 9 of Regulation (EC) No 2560/2001, shall not be required to submit a notification as referred to in paragraph 1 of this Article.
Article 15 Review
1. By 19 April 2022, the Commission shall present to the European Parliament, the Council, the ECB and the European Economic and Social Committee a report on the application and impact of this Regulation, which shall contain, in particular: (a) an evaluation of the way payment service providers apply Article 3 of this Regulation, as amended by Regulation (EU) 2019/518 of the European Parliament and of the Council ( 5 ); (b) an evaluation of the development of volumes and charges for national and cross-border payments in national currencies of Member States and in euro since the adoption of Regulation (EU) 2019/518; (c) an evaluation of the impact of Article 3 of this Regulation, as amended by Regulation (EU) 2019/518, on the development of currency conversion charges and other charges related to payment services, both to payers and payees; (d) an evaluation of the estimated impact of amending Article 3(1) of this Regulation to cover all currencies of Member States; (e) an evaluation of how providers of currency conversion services apply the information requirements laid down in Articles 3a and 3b of this Regulation and the national legislation implementing Articles 45(1), 52(3) and 59(2) of Directive (EU) 2015/2366, and whether those rules have enhanced the transparency of currency conversion charges; (f) an evaluation of whether and to what extent providers of currency conversion services have faced difficulties with the practical application of Articles 3a and 3b of this Regulation and the national legislation implementing Articles 45(1), 52(3) and 59(2) of Directive (EU) 2015/2366; (g) a cost-benefit analysis of communication channels and technologies that are used by, or are available to, providers of currency conversion services and that can further improve the transparency of currency conversion charges, including an evaluation of whether there are certain channels which payment service providers should be required to offer for the sending of the information referred to in Article 3a; that analysis shall also include an assessment of the technical feasibility of disclosing the information in Article 3a(1) and (3) of this Regulation simultaneously, prior to the initiation of each transaction, for all currency conversion options available at an ATM or at the point of sale; (h) a cost-benefit analysis of introducing the possibility for payers to block the option of currency conversion offered by a party other than the payer's payment service provider at an ATM or at the point of sale and to change their preferences in this regard; (i) a cost-benefit analysis of introducing a requirement for the payer's payment service provider, to apply, when providing currency conversion services in relation to an individual payment transaction, the currency conversion rate applicable at the moment of initiation of the transaction when clearing and settling the transaction. 2. The report referred to in paragraph 1 of this Article shall cover at least the period from 15 December 2019 until 19 October 2021. It shall take account of the specificities of various payment transactions, distinguishing in particular between transactions initiated at an ATM and at the point of sale. When preparing its report, the Commission may use data collected by Member States in relation to paragraph 1.
Amendment rationale: CONTEXT OF THE PROPOSAL Reasons for and objectives of the proposal The EU’s Single Market allows people, services, goods and capital to move freely in an economy with an annual Gross Domestic Product of EUR 15 trillion. It offers new opportunities for European businesses and contributes to healthy competition. This leads to more choice, better services and lower prices for over 500 million consumers. A key priority of the Juncker Commission is the creation of a deeper and fairer Single Market. In December 2015, the European Commission presented a Green Paper to consult on the potential of a more integrated market for retail financial services, and the actions needed to achieve this goal. Based on the feedback received from stakeholders and the European Parliament's Report 1 on the Green Paper, the Commission published in March 2017 an Action Plan 2 setting out a strategy to str engthen the Single Market for consumer financial services. Cross-border payments are crucial for the integration of consumer financial services and the EU’s economy. They play an important role in bringing together people and businesses in EU Member States. Restrictions and excessive costs for cross-border payments prevent the completion of the Single Market. Fees for cross-border payments Regulation 924/2009 on cross-border payments equalised, across the EU, fees for cross-border payments in euro within the Union with domestic payments in euro (i.e. payments in euro within the same Member State). Non-euro area Member States, although covered by the Regulation, did not benefit from the effects of that Regulation: in these Member States, domestic payments in euro are either very expensive or simply do not exist. As a consequence, people and businesses in these non-euro area EU Member States pay high fees whenever a payment crosses the border of their country or when people travel and pay abroad. These high costs are an impediment to the completion of the Single Market and create two categories of payment service users in the EU. Non-euro area Member States were given the option to extend Regulation 2560/2001 and its successor Regulation 924/2009 to their national currencies. However, this option was only used by Sweden, which aligned fees for cross-border payments in Swedish krona with fees for domestic payments in Swedish krona. The objective of this proposal is to bring the benefits of Regulation 924/2009 to people and businesses in Member States outside the euro area, and put an end to the high cost of intra-EU cross-border transactions in euro. This high cost acts as a barrier to exchanges between euro area and non-euro area Member States and is detrimental to both areas. People and businesses outside the euro area suffer higher costs to access markets or interact with people in the euro area. This means they cannot trade or compete with their counterparts in the euro area under the same conditions. For example, when a non-euro area business has suppliers located in the euro area, the cost of its input will be higher than it would be for a competitor located in the euro area. Equally, this additional barrier to free movement and trade limits the number of potential clients available to euro area businesses. The tables below illustrate the current situation and the situation after application of the amended Regulation. The proposal does not deal with cross-border transactions in other currencies than euro. CURRENT SITUATION SENDING EUROS FROM … TO … Euro area (+ Sweden) 3 Non-euro area Euro area (+ Sweden) ZERO/LOW FEES HIGH FEES Non-euro area ZERO/LOW FEES FOR THE SENDER HIGH FEES FOR RECEIVER HIGH FEES At present, for example a citizen or company in Bulgaria 4 making a cross-border transfer of EUR 500 to Finland may have to pay up to EUR 24 in fees, whereas a person transferring the same amount to Finland from France would pay nothing, or almost nothing 5 . The person making the payment from France would pay the same amount that he would pay for a domestic transfer within France. AFTER THE AMENDMENTS CONTAINED IN THIS PROPOSAL SENDING EUROS FROM … TO … Euro area (+ Sweden) Non-euro area Euro area (+ Sweden) ZERO/LOW FEES ZERO/LOW FEES Non-euro area ZERO/LOW FEES ZERO/LOW FEES As a result of the amendments contained in this proposal, the citizen or company transferring euros from Bulgaria would also pay nothing — or almost nothing — in this situation. This person or company would pay the same fees for a transfer in euros to Finland that they would pay for a domestic transfer in levs within Bulgaria. Transparency obligations related to currency conversion practices The amendments to Regulation 924/2009 contained in this proposal also establish additional transparency obligations for currency conversion practices in line with Articles 45 and 59 of Directive 2015/2366 on payment services in the internal market. These new transparency obligations are warranted, because consumers in the EU face a lack of transparency whenever they make a payment involving a currency conversion. When a consumer makes a card payment abroad (be it a cash withdrawal at an ATM or a card payment at a point of sale) in a different currency than their home currency, they are often given two choices. The first choice is to pay in their home currency, a service called dynamic currency conversion. This service is offered by dynamic currency conversion providers and the bank of the merchant. The consumer’s second choice is to pay in the local currency using the services of the card scheme and the consumer’s bank (non-dynamic currency conversion or ‘on-network’ conversions). Consumers have been complaining about dynamic currency conversion practices in particular. This is because they consider that they lack the necessary information to make an informed choice. As a result, consumers often unwillingly choose the more expensive currency conversion option. This proposal will enhance transparency for consumers by disclosing the full cost of a cross-border transaction. It will help them compare currency conversion service offers before starting a payment transaction involving a currency conversion. Considering the very technical nature of currency conversion in a fast-changing environment, the European Banking Authority will be tasked with establishing regulatory technical standards to better frame currency conversion practices. The proposal will also establish a temporary cap on currency conversion costs until the transparency measures devised by the European Banking Authority take effect, i.e. at the latest 36 months after the entry into force of the amended Regulation. Once implemented, this proposal will generate significant savings for consumers, while the revenues of some payment service providers may decrease. The proposal will also ensure that currency conversion costs are not used by payment service providers to compensate for reduced revenues through increased non-transparent margins on currency conversion, as these costs are usually not known by payment service users. Consistency with existing policy provisions in the policy area Since the introduction of the euro, the European Union has launched various initiatives to significantly reduce the cost of cross-border transactions. The three most important such initiatives are listed below. - The introduction of a set of single euro payments area (SEPA) standards for euro transactions, including single euro payments area credit transfers and single euro payments area direct debits. - The Payment Services Directives (Directive 2007/64/EC, replaced by Directive (EU) 2015/2366) increased the transparency of fees and facilitated the entry of new players in the market. This contributed to greater competition in payments, including cross-border payments, 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 also contributed by equalising fees for cross-border and national payments in euro within the EU. 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.
Revised version (Article 15 Review):
1. By 19 April 2022, the Commission shall present to the European Parliament, the Council, the ECB and the European Economic and Social Committee a report on the application and impact of this Regulation, which shall contain, in particular: (a) an evaluation of the way payment service providers apply Article 3 of this Regulation, as amended by Regulation (EU) 2019/518 of the European Parliament and of the Council ( 6 ); (b) an evaluation of the development of volumes and charges for national and cross-border payments in national currencies of Member States and in euro since the adoption of Regulation (EU) 2019/518; (c) an evaluation of the impact of Article 3 of this Regulation, as amended by Regulation (EU) 2019/518, on the development of currency conversion charges and other charges related to payment services, both to payers and payees; (d) an evaluation of the estimated impact of amending Article 3(1) of this Regulation to cover all currencies of Member States; a cost-benefit analysis of communication channels and technologies that are used by, or are available to, providers of currency conversion services and that can further improve the transparency of currency conversion charges, including an evaluation of whether there are certain channels which payment service providers should be required to offer for the sending of the information referred to in Article 3a; that analysis shall also include an assessment of the technical feasibility of disclosing the information in Article 3a(1) and (3) of this Regulation simultaneously, prior to the initiation of each transaction, for all currency conversion options available at an ATM or at the point of sale; (h) a cost-benefit analysis of introducing the possibility for payers to block the option of currency conversion offered by a party other than the payer's payment service provider at an ATM or at the point of sale and to change their preferences in this regard; (i) a cost-benefit analysis of introducing a requirement for the payer's payment service provider, to apply, when providing currency conversion services in relation to an individual payment transaction, the currency conversion rate applicable at the moment of initiation of the transaction when clearing and settling the transaction. 2. The report referred to in paragraph 1 of this Article shall cover at least the period from 15 December 2019 until 19 October 2021. It shall take account of the specificities of various payment transactions, distinguishing in particular between transactions initiated at an ATM and at the point of sale. When preparing its report, the Commission may use data collected by Member States in relation to paragraph 1.
Article 16 Repeal
Regulation (EC) No 2560/2001 is repealed, as from 1 November 2009. References to the repealed Regulation shall be construed as references to this Regulation.
Article 17 Entry into force
This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union . It shall apply from 1 November 2009. This Regulation shall be binding in its entirety and directly applicable in all Member States.