Deputies from the European Parliament gave their final backing to reforms that will help 150 million Europeans who live outside the Eurozone avoid excessive bank charges when they make cross-border payments.
According to the new rules, banks should charge equally for cross-border payments in euro and domestic payments to make currency conversion costs transparent.
The move to adopt the new rules was adopted by a 532-22 margin, with 55 abstentions, The new rules will end market discrimination against payment service users that are in the EU, but outside the Eurozone.
The total net effect for the bloc will amount to roughly €1 billion in savings.
“150 million EU citizens and 6 million businesses living and operating in countries outside the Eurozone have been paying much higher charges for euro transfers than their Eurozone counterparts,” said European People’s Part rapporteur Eva Maydell, who also suggested that the legislation is “the second, small EU revolution after the abolishment of roaming fees”.
Before the end of this year, charges for cross-border payments should be harmonised with the single euro payments area (SEPA), which is in place for transactions within the Eurozone and follows the same charge rule. Additionally, the 28 nations that make up the EU are free to impose rules on banks to apply the same charges to cross-border and domestic non-euro payments.
The new measures will also protect consumers from being charged arbitrary costs for currency conversions in sale points and ATMs as at each transaction they will be informed about the amount to be paid in the local currency and the currency of their account for payments at a point of sale or ATM, while using the ECB reference rate as the standard. Additional charges set individually by banks will remain in place.
A text message, e-mail, or notification will inform consumers through the payer’s mobile or web banking application about the currency conversion charges. These notification services have to be offered free of charge.
Before each payment is made, the banks will also need to disclose the estimated full cost of currency conversion in the event of a bank transfer.