EU Regulation (EU) 2021/1230 of the European Parliament and of the Council, regarding cross-border payments in the Union entered into force, yesterday, 19th August 2021.
Said Regulation, which repeals Regulation (EU) 924/2009, has the objective of facilitating cross-border exchanges within the Union, for which the following is essential:
(i) that the commission applicable to cross-border payments in Euros are the same as those applicable to similar payments in each member State;
(ii) that measures are adopted in relation to commission for the conversion of currency, particularly for protecting consumers from excessive commissions.
The Regulation establishes the principle of equality of commission on payments which are initiated or finalised in paper format or in cash, which are processed by electronic means during the chain of execution of the payment, cheques excluded, and for all commissions directly or indirectly linked to a payment operation. This principle shall be applied in order to avoid market fragmentation, in such a way that each operation category for cross-border payments shall be made to correspond to a national payment category, with similar or comparable characteristics.
Likewise, in order to avoid inequality, it is deemed necessary to guarantee that the commission applicable to cross-border payments in Euros within the European Union are made equivalent to those applicable to the comparable payments carried out in the national currency of the State in which the provider of the payment service to the user of the payment service is located, under the criteria of the place in which the services are rendered.
In order to facilitate the execution of cross-border payments to the providers, the Regulation aims to promote advances in the use of the of the International Bank Account Number (IBAN) and the Bank Identifier Code (BIC), thus suppliers must provide these data to users.
It is made possible for member States who use a different currency from the Euro to apply this Regulation through a notification procedure.
As for the scope of application, the Regulation establishes rules regarding cross-border payments, implements the principle of transparency regarding the commission on the conversion of currency within the Union and it is applicable to: (i) cross-border payments designated in Euros or in any of the national currencies of member States which have carried out procedures of notification; (ii) national and cross-border payments, in Euros or another national currency, which imply the rendering of a currency conversion service. Payments made by payment service providers either on their own behalf or on behalf of other providers are excluded from the scope of the Regulation.
With regard to concepts, it establishes, among others, the following: “Cross-border payment” (payment operation processed by electronic means, initiated by a payer or a payee, or through the mediation of the latter, in which both the payment service provider of the payer and of the payee are located in different member States); “Payer and payee”; Provider and User of payment services” (the latter being a natural person or legal entity which makes use of a payment service, whether they be the payer or the payee, or both); “Payment order”; “Commission”; “Funds” (notes, coins, scriptural money and electronic money), “Small business” and “Consumer” (natural person who acts with purposes other than their professional, commercial or business activities).
The following rules are established:
(a) The commission that consumers are charged regarding cross-border payments in Euros shall be the same as those charged for equivalent national payments of an equal amount in the national currency of the State in which the provider is located;
(b) The commission charged to a user in relation to cross-border payments in the national currency of a member State which has effected the notification shall be the same as the commission charged by said provider to users in relation to equivalent national payments for the same amount;
(c) With regard to the commission for the conversion of currency concerning payment operations with cards, providers offering such services in cash machines or in points of sale, shall express the total amount of the commission for the conversion of the currency as a percentage margin on the last available Euro exchange rate of reference published by the CEB, which must be made public in a comprehensible and easily accessible way in a widely available and easily accessible electronic format;
(d) With regard to commission on the conversion of currency in relation to transfers initiated online, the provider shall communicate to the payer an estimation of the commission for the currency conversion services applicable to the transfer in a neutral and comprehensible way.
Likewise, the following obligations for the member States are established:
(i) to have procedures in place which allow the users and other interested parties to file claims to the competent authorities with regard to infringements of this Regulation on the part of payment service providers;
(ii) to establish adequate and efficient out-of-court claim and appeal proceedings with a view to the resolution of disputes, at least for consumers and small businesses;
(iii) cross-border cooperation in the resolution of cross-border disputes;
(iv) setting up of an effective, proportionate and dissuasive penalty system.
The Commission shall present the Parliament, the Council, the CEB and the European Economic and Social Committee with a report on the application and impact of this Regulation, distinguishing between transactions initiated in a cash machine and a point of sale no later than 19th April 2022.
Mireia Bosch
Vilá Abogados
For more information, please contact:
20th August 2021
