EUROPEAN REGULATORY CHANGES IN PAYMENTS: HOW IS THE “SAME • As for credit transfers, when a currency conversion CHARGES” RULE CHANGING IN AND HOW WILL DYNAMIC CURRENCY service is offered by the payer’s payment service provider CONVERSION SERVICES BE OFFERED? in relation to a credit transfer that is initiated online directly at the website or at the application of the The European Parliament and the Council reached Building up on PSD2’s requirements in article 45 payment service provider, the payment service a political agreement on 19 December 2018 on (1c and 1d) for the transparency of charges and of provider shall inform the payer, in a clear, neutral and a Commission proposal to review and amend exchange rates prior to the transaction – on the side comprehensible manner, of the estimated charges for Regulation (EC) No 924/2009 covering charges on of Payment Services Providers (PSPs) – and on article currency conversion services applicable to the credit cross-border payments in the Union and currency 59 (2) for information from DCC providers at Point transfer prior to the initiation of the transaction. Moreover, conversion charges. The proposal was published by of Sale and ATMs, the new regulation allows for the payment service provider shall disclose the estimated the as recently as 28 March comparability between DCC and non-DCC for total amount of the credit transfer in the currency of 2018, which makes the agreement reached on the the payment service user. This is achieved through the payer’s account, including any transaction fee text in December the result of a fairly quick, nine- the following measures: and any currency conversion charges. That amount month long set of negotiations between the three shall be communicated in a clear and neutral manner to MONICA institutions. • The currency conversion charges, for both PSPs the payer. The payment service provider shall also disclose and DCC providers, for all card-based payments the estimated amount to be transferred to the payee Founder So what is changing for cross-border should be expressed as a percentage in the currency of the payee’s account. payments in Europe and when will mark-up over the European Central Based in since 2003, Monica the new rules be applicable? Bank’s latest available While the new Regulation constitutes quite a change is the founder of TrustEuAffairs. The Regulation application foreign exchange reference compared to the 2009 version, the final text of the She is a member of the Society of date is set for 15 rate(s); Regulation leaves aside some ideas raised in the European Affairs Professionals since negotiation by the European Parliament, for example, December 2019, • DCC providers must 2004, a Member of the the idea to extend the “same charges” rule to all EU except for certain disclose information Virtual Currencies Taskforce, and currencies, the idea of the possibility for Payment Services aspects, leaving less on their charges of the European Commission Users to block the use of DCC on their payment method, than one year for the in a Payment Systems Market Expert clear and or the idea to require Payment Services Providers and DCC industry to adopt it. Group. Monica can be contacted accessible manner providers to display currency-exchange markups side-by- First of all, the new at [email protected]. (at the counter on a side at the POS and ATM on terminals in order to have full regulation extends placard or digitally comparability and transparency. All in all, the approved the “same charges” on the terminal, for text does not threaten the offering of the DCC service itself rule to transfers in example), including as other options proposed may have done; yet, having between non- information on the the DCC and issuers’ markups over the same European ABOUT TRUST EU AFFAIRS euro member amount in the payee’s Central Bank benchmark rate, may result in reduced DCC states. This means that currency (corresponding use overtime. Trust EU Affairs is a regulatory affairs the charges levied by to the price of the goods/ consultancy specializing in financial payment service providers services, and could be As for banks, while the initial Commission text did not services legislation at the European for cross-border payments in displayed on the checkout) and include in its scope credit transfers at all, credit transfers Union level. Founded in Brussels in Euros between two EU member the total amount after conversion are now included, and there is, for example, the obligation 2013, it draws upon over 17 years states cannot be higher than the in the payer account’s currency (could to disclose the estimated total amount of the credit transfer of EU regulatory and public affairs charges for national payments made in the in the currency of the payer’s account, including any be displayed on the payment terminal). Confirming experience. national currency of the Member where article 59 (2) PSD2, the payer shall remain free to transaction fee and any currency conversion charges, the payment service provider of the payment refuse DCC and use non-DCC for the transaction. or the obligation to disclose the estimated amount to be service user is located. transferred to the payee in the currency of the payee’s • Payers’ Payment Service Providers must make account, which may result in extra transparency efforts Moreover, non-euro member states may notify easily accessible the information on their charges for the banking sector. On a positive note, the initial their intention to extend this rule to EU cross- on an electronic platform (websites, home-banking temporary cap on the maximum amount of all charges border transactions made in their national websites - if available -, mobile banking apps). allowed for the currency conversion services that could be currency. The second and most important change PSPs also have to inform the payer of the rates by applied to a payment transaction, which was mentioned in in the regulation is the increase in transparency appropriate means when a transaction is made in the Commission March 2018 draft text, is not part of the of currency conversion charges, for Dynamic another currency (and every month following such agreed outcome. The Regulation is now to be published in the Official Journal of the (the OJ); it will Currency Conversion (DCC) providers as well as transactions), and regularly if the payer seems to be become law 20 days after its publication. for non-DCC providers (payment service providers). staying in the .

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