Revised Cross Border Regulation (CBPR2) has been saved
Revised Cross Border Regulation (CBPR2)
Transparency of currency conversion charges
Background of original Cross Border Payment Regulation (924/2009)
In September 2009, the European Parliament issued a Regulation on cross-border payment that aimed at facilitating cross-border trade within the Union by ensuring that cross-border payment charges across Member States are the same regardless of the participation in the euro area.
Unfortunately, the non-euro area Member States did not benefit from the entry into force of the latter Regulation. For these Member States, domestic payments in euro remain very costly and consequently rare. From a study carried out by Deloitte Luxembourg from a request of the European Commission, a transfer of €10 initiated in Bulgaria can be charged from €15 to €24 to the payer while a transfer from a euro area Member State to a Member State using a national currency would be charged a much lower (or no) fee(s).
The direct consequence is the high level of fees for cross-border payments initiated from their country. This creates a significant barrier to the achievement of a Single Market that would only have one payment service users category without any discrimination on the currency used.
Introducing the new Regulation (2019/518) – Cross Border Payment Regulation 2
The Revised Cross-Border Payment Regulation aims ensure that cross border payments in euro are not more costly than national transaction in the national currency of a non-euro Member State.
Additionally, the Regulation aims to increase cost transparency requirements, for currency conversion services provided when clients initiate online credit transfers and card-based transactions.
The new Regulation and its requirements are progressively entering into force following the below timeline:
1. Extension of the scope of the CBPR – Applicable since December 15th, 2019
The revised Regulation extend the scope of price equality to non-euro Member States. Since December 15th 2019, fees and charges should be the same for cross-border payments in euro as payments of a similar value in the national currency of that Member State.
2. Increased transparency for card-based transactions and online credit transfers – Applicable as of April 2020
Prior to the initiation of any card-based transaction that involves a currency conversion at either an ATM or Point of Sale, the service provider needs to disclose the following information to the payer:
- The total currency conversion charges as a percentage mark-up over the most recent euro foreign exchange rate issued by the ECB*
- The amount to be paid to the payee in its currency*
- The amount to be paid to the payer in the currency of its account*
- The option for the payer to pay in the currency used by the payee
*This information also needs to be provided to the payer after the initiation of the payment on a durable medium.
The mark-up mentioned above will need to be disclosed on a broadly available and easily accessible electronic platform.
Moreover, prior to an online initiation of a credit transfer on its web or mobile banking application, the payment service provider shall provider the payer with the following information:
- The estimated currency conversion charges applicable to the transfer
- The estimated total amount of the credit transfer in the currency of its account
- The estimated amount to be transferred to the payee in the currency of the latter
3. Electronic messages – Applicable as of April 2021
As of 19 April 2021, card issuers shall send without undue delay an electronic message with the percentage mark-up after having received and authorized a payment order from a Point of Sale or a cash withdrawal at an ATM for a payment denominated in another EU currency. This information must be provided for free and through a channel broadly available and easily accessible.
Nevertheless, the provider needs to give the user the possibility to opt-out of receiving these electronic messages.
How can Deloitte assist you?
Deloitte offers tailored services to assist your organization to overcome the implementation challenges, and to align with the regulatory changes imposed by the Revised Cross-Border Payment Regulation (CBPR2). Do not hesitate to contact us if you need any support.