Which objective(s) will the Commission pursue?

The Commission’s proposal aimed at extending the benefit of Regulation 924/2009 to all Member States, ensuring that cross-border payments in euro cost the same as domestic payments in the local currency of a Member State (whether the euro or another currency) from which the cross-border payment originates. The Commission’s proposal also sought to increase the transparency of currency conversion charges, ensuring that consumers receive sufficient information about conversion rates and related cost.

Estimated savings and benefits

The direct savings for payment service users (mainly consumers and small and medium-sized businesses; large corporates usually benefit from negotiated fees) and corresponding decreased revenues for payment services providers brought by this measure are estimated at €900 million annually stemming from reduced fees charged on cross-border transactions in euro.

Outcome of Legislative Procedure

Regulation (EU) 2019/518 extends the benefit of Regulation 924/2009 to all Member States, ensuring that cross-border payments in euros cost the same as domestic payments in the local currency of a Member State. In this respect the text of the Regulation mirrors the Commission proposal, except for the application date, which has been set on 15 December 2019.

Regulation (EU) 2019/518 also establishes additional transparency obligations for currency conversion practices in line with relevant provisions of Directive 2015/2366 on payment services in the internal market. In this respect, the text of the Regulation diverges from the Commission proposal, as the former introduces a number of provisions at level 1 (Regulation level). The Commission’s proposal instead included a mandate to the European Banking Authority to establish regulatory technical standards to better frame currency conversion practices. The proposal also foresaw 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.

The mandate to the European Banking Authority, thereby including the temporary cap on currency conversion costs, was not retained during the legislative negotiations by Council and Parliament.

Notwithstanding this substantial difference, the Regulation respects the spirit and rationale of the Commission proposal with regard to enhancing currency conversion transparency, as it ensures consumers’ ability to compare the costs of different currency conversion options. To this end, it provides for separate transparency requirements on (i) card-based transactions and (ii) credit transfers, something the Commission’s proposal did not foresee.

A codification (Regulation (EU) 2021/1230) was published on 30 July 2021 and entered into force on 19 August 2021.