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 (MS) are the same regardless of the participation in the euro area.

Back then the non-euro area MS still hadn’t benefited from the entry into force of the latter regulation. For these MS, domestic payments in euro remained very costly and consequently rare. According to a Deloitte Luxembourg study conducted by request of the European Commission at the time, initiating a €10 transfer from Bulgaria would cost the payer between €15 to €24, while a transfer from a euro area MS to a MS using a national currency would be charged a much lower (or no) fee(s).

The direct consequence was the high level of fees for cross-border payments initiated from their country. This created 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.

Regulation 2019/518 – Introducing Cross-Border Payment Regulation 2 (CBPR2)

The revised Cross-Border Payment Regulation (CBPR2) aimed at ensuring that cross border payments in euro are not more costly than national transaction in the national currency of a non-euro MS. Additionally, it increased cost transparency requirements, for currency conversion services provided when clients initiate online credit transfers and card-based transactions. The following 3 vectors sum up the focus of this regulation:
 

1. Extension of the scope of the CBPR – Applicable since 15 December 2019

The revised regulation extend the scope of price equality to non-euro MS. Since 15 December 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 MS.
 

2. Increased transparency for card-based transactions and online credit transfers – Applicable as of 19 April 2020

Before 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 by 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, before an online initiation of a credit transfer on its web or mobile banking application, the payment service provider should provide 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 19 April 2021

Card issuers should 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 such electronic messages.

Regulation 2021/1230 – CBPR2 codified

The codified CBPR2 (2021/1230) that entered into force on 19 August 2021, extends the scope of price equality to non-euro MS and increases transparency for currency conversion rates and charges:

• To facilitate the functioning of the internal market and to avoid inequalities between payment service users in the euro area and non-euro area MS in respect of cross-border payments in euro, it’s necessary to ensure that charges for cross-border payments in euro within the Union are aligned with charges for corresponding national payments made in the national currency of the MS in which the payment service provider of the payment service user is located. This applies to all charges for payments initiated or terminated on paper or in cash, but processed electronically in the payment execution chain, excluding cheques, and all charges directly or indirectly linked to a payment transaction, including charges linked to a contract, or setting up a permanent payment order, or fees for using a payment card.
• Currency conversion charges represent a significant cost of cross-border payments when different currencies are in use in the payer’s MS and payee’s MS. Additional measures are required to protect consumers against excessive charges for currency conversion services, and to ensure that consumers are given the information they need to choose the best currency conversion option. For instance, in situations in which the payer is confronted with different currency conversion options at an ATM or at the point of sale, the information provided should make comparison possible, to allow the payer to make an informed choice before executing the payment. To achieve comparability, currency conversion charges for all card-based payments should be expressed in the same way, namely as percentage mark-ups over the latest available euro foreign exchange reference rates issued by the European Central Bank (ECB).

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.