The new provision of the European regulation known as "CBPR2" imposes transparency on the cost of cross-border transactions. It applies to card payments, withdrawals and international transfers. Read all about it.
Greater transparency for card payments and transfers
Before making a payment, cardholders must know the amount of the conversion fee they will be charged. This amount must be communicated at the time of any payment or ATM withdrawal in a European country outside the euro zone.
For cross-border transfers involving currency conversion, the customer needs to know: the total amount of the transfer debited from his or her account, the estimated amount of the transfer and the amount transferred to the beneficiary, and the estimated currency conversion costs.
Since April 19, payment service providers have been obliged to provide their customers with this information free of charge, in a neutral and comprehensible way, using several media: account agreements, their website and their mobile application.
Rules applicable to all payment players
These rules, which apply to all payment service providers for transactions carried out within the EU, have several objectives:
- Reduce cross-border transaction fees in the industry.
- Put an end to inequalities between payment service users acting from a euro zone Member State and those established in non-euro zone Member States.
- Make it easier for payers to compare conversion charges, so they can take advantage of the competition and choose the best offer.
The European Commission will present a report on the application of these new rules no later than April 19, 2022.
What are the banks' reactions?
Banks, which have informed their customers of these new provisions via their general terms and conditions of sale, need to review their strategy. This will have an impact on the prices they charge, and on the way they communicate with their customers. Some players have already anticipated this, such as BPCE, which has signed a partnership agreement with Transferwise. Others want to create their own solution. One example is Santander, which has committed to innovation by offering an international money transfer service called "PagoFX". This new service combines the best of the fintech and banking worlds in a reliable, easy-to-use and low-cost application.
While Transferwise, a key player in international money transfers, welcomes the introduction of CBPR2, the fintech, like other specialists, regrets that its scope is limited to the EU. Transactions to other territories, such as the French overseas departments and territories or the United States, are not covered.