Cross-border payments in the EU

SUMMARY OF:

Regulation (EU) 2021/1230 on cross-border payments in the European Union

WHAT IS THE AIM OF THE REGULATION?

It codifies the rules within the European Union (EU) on:

cross-border payments*
the transparency of currency conversion charges.

KEY POINTS

The regulation applies to cross-border payments denominated in:

euro;
the national currencies of EU Member States which have signed up to the legislation and have informed the European Commission.

Charges* for cross-border payments in euro or in the national currency of participating Member States should be the same as for corresponding payments within a Member State.

Payment service providers* provide customers:

using card-based transactions, free of charge, with:
- total currency conversion charges as a percentage markup of the latest European Central Bank euro reference exchange rates in a comprehensible and easily accessible manner before the payment is made,
- details electronically without undue delay, and at least once a month, after the transaction;
making online credit transfers with:
- clear, neutral and comprehensible information before the transaction of the total amount of the transfer, including any transaction fee and currency conversion charges.

Companies providing currency conversion services at an ATM or at point of sale provide customers with clearly displayed information before a transaction with:

total currency conversion charges as a percentage markup;
the amount involved in both the payer’s and payee’s own currencies and the possibility of paying in either.

Customers and suppliers of goods and services applying the regulation to make and receive payments use their international payment account number identifier (IBAN) and the payment service provider’s business identifier code (BIC).

Member States:

designate national authorities to monitor and ensure compliance with the legislation;
establish procedures for payment service users and others to submit complaints;
provide for adequate and effective out-of-court complaint and redress procedures;
ensure cooperation between their national authorities, particularly in solving cross-border disputes;
apply penalties for violations of the legislation.

The Commission presents a report by 19 April 2022 on the application and impact of the regulation, between at least 15 December 2019 and 19 October 2021, to the European Parliament, the Council of the European Union, the European Central Bank and the European Economic and Social Committee.

The regulation repeals Regulation (EC) No 924/2009.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 19 August 2021.
A Member State that does not have the euro as its currency, which decides to extend the application of this regulation to its national currency, is required to notify the Commission accordingly.

BACKGROUND

The single euro payments area aims to ensure that:

making electronic payments in the euro area is as easy as making cash payments;
no extra charges are involved when making an electronic euro payment from one Member State to another.

Directive (EU) 2015/2366 requires the charges and exchange rate used in cross-border payments to be transparent. It also specifies the information to be given to customers (see summary).

KEY TERMS

Cross-border payments. Electronic wholesale and retail payments where the payer and the recipient are in different countries.

Charge. The direct or indirect cost linked to a payment transaction.

Payment service provider. A company that enables businesses to accept credit or debit card and digital wallet in-person and online payments.

MAIN DOCUMENT

Regulation (EU) 2021/1230 of the European Parliament and of the Council of 14 July 2021 on cross-border payments in the Union (codification) (OJ L 274, 30.7.2021, pp. 20–31).