The European Commission announced yesterday a long overdue proposal to make cross-border payments in euro cheaper across the entire EU. Consumers and businesses in the euro area already have benefited from low fees for cross-border payments in euro since 2001. Under current rules, there is no difference for euro area residents or businesses if they carry out euro transactions in their own country or with another euro area Member State.
The proposal aims to extend this benefit to people and businesses in non-euro countries when they pay by bank transfer or travel abroad and make withdrawals from cash machines, putting an end to the high cost of intra-EU cross-border transactions in euros.
All intra-EU cross-border payments in euros outside the euro area will now be priced the same – with small or no fees – as domestic payments in the local official currency. The Commission writes that today’s hefty fees are an obstacle to the Single Market, as they create barriers to cross-border activities.
The Commission also proposes brining more transparency and competition to currency conversion services when consumers are buying goods or services in a different currency than their own.
At the moment, consumers are usually not informed or aware of the cost of a transaction that involves a currency conversion. The proposal will therefore require that consumers are fully informed of the cost of a currency conversion before they make such payment (with their card abroad, be it a cash withdrawal at an ATM, a card payment at a point of sale or online).
In total 150 million consumers are expected to benefit from the proposal, besides those 360 million consumers in the euro zone who already benefit from it. Consumers and businesses are expected to save €1 billion.
The proposal will now be submitted to the European Parliament and Council, but no date was given for its adoption.