Feb. 15, 2019
European Union officials have voted to approve a long-sought plan to lower charges for cross-border payments made within the eurozone.
The measure — approved in a plenary vote of 522 to 22 — will require banks to charge equally for cross-border euro payments between EU countries that are in the eurozone and those that are not. Additionally, banks will be required to make currency conversion costs transparent, according to the announcement.
By the end of the year, charges for cross border payments in euros must be in line with charges for payments made inside a country using the local currency. Member states also will be free to require banks to apply the same charges for cross-border and domestic non-euro payments.
"One hundred and fifty million EU citizens and six million businesses living and operating in countries outside the eurozone have been paying much higher charges for transferring euro than their eurozone counterparts," EU Rapporteur Eva Maydel said in the announcement. "This will no longer be the case and all Europeans will pay significantly lower charges, which will save them more than 1 billion euro annually. This is the second small EU revolution after the abolition of roaming fees."
Officials said the new rules will protect consumers from arbitrary charges required for currency conversions. Consumers will now be informed of the charges to be paid in the local currency and in the currency of their account. The charges will be disclosed in a common way whether using an ATM or point of sale terminal.
Consumers will get a text message, email or notification through the payer’s mobile or web banking application about the currency charges, according to the announcement.
James Booth, head of new business development at U.K.-based payment provider PPRO, told Mobile Payments Today that the vote represents a clear shift towards a more open and transparent banking system.
"Services such as transferWise, Xoom, Ofx, etc., in recent years helped apply pressure on banking institutions via increased competition and transparent fee structures and this is beginning to affect the overall cross-border payments landscape," he wrote in an email. "In turn the EU is now reducing transfer costs and increasing transparency for end users. Consumers have been benefiting from new fintech disrupting the banking and financial sector for several years now, but this has been one of the first major overhauls on an EU parliament level and another step in the right direction for fintechs in the EU."
Topics: Mobile Banking, Mobile Payments, Money Transfer / P2P, Region: EMEA, Regulatory Issues
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