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Reform of EU price regulation: New information obligations in payment - EU relies on comparison platforms for transparency
The EU Price Regulation on cross-border payments (Regulation EC/924/2009) has been revised. As of April 19, 2020, the new EU Price Regulation (EU 2019/518), among other things, imposes stricter transparency obligations for currency conversion fees for electronic transfers (web or online and mobile banking) and in connection with card-based payment transactions (use of a payment card at the POS and at ATMs).
The new provisions apply to payment transactions within the European Economic Area (EEA) if they are made in a foreign EEA currency and include a currency conversion. Specifically, this currently affects the United Kingdom (GBP) - despite the Brexit on January 31, 2020, the pound sterling is still included during the transitional period -, Bulgaria (BGN), Denmark (DKK), Iceland (ISK), Croatia (HRK), Norway (NOK), Poland (PLN), Romania (RON), Sweden (SEK), Liechtenstein (CHF), the Czech Republic (CZK) and Hungary (HUF).
New information requirements for currency conversions
In the online environment, before initiating the payment transaction, the payment service provider shall provide information on the estimated currency conversion charges applicable to the transfer and the estimated total amount of the transfer.
In the case of card-based payment transactions, information obligations concerning currency conversion charges and the applicable exchange rate shall be fulfilled before the payment transaction is initiated. The currency conversion charges shall be expressed as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the ECB. The cut-off date for the above-mentioned obligations is 19.4.2020. Other obligations - they concern the sending of electronic notifications of currency conversions when payment cards are used – kick in one year later (from 19.4.2021).
EU relies on development of comparison platforms
The regulation also contains an explicit obligation to make the mark-ups accessible on an "electronic platform" - i.e. on websites or apps. The recitals of the regulation state that this should contribute to the development of comparison platforms to make it easier for consumers to compare prices when travelling or shopping abroad.
It will be possible to implement the information obligations, for example, by adapting the contractual documents and websites or price and service specifications. The fulfilment of the obligations at the terminals will be technically more complex. The German Banking Industry (DK), i.e. the representative body of the central associations of the banking industry, has also announced that it will publish information and assessments of the new legal provisions of the Price Regulation on its website.
Author: Christoph Krück