On Wednesday 28 March, the European Commission will present a legislative proposal for cheaper cross-border payments in euro and fairer currency conversions for consumers. On the eve of the presentation, the European Consumer Organisation (BEUC) welcomes the fact that the Commission is finally planning to tackle the “fraud” of currency conversion.
Dynamic currency conversion is a practice offered by merchants to consumers when abroad or online, to allow them to pay in their local currency.
Article 59 of the payment services directive (PSD2) already provides for an obligation to inform the consumer of all costs and exchange rates applicable. However, BEUC considers that in practice, these obligations are not complied with and that consumers are often not notified of the exchange rate unless they read the receipt sent to them at the end of the transaction.
The Commission is expected to propose additional measures to further improve the transparency of the practice, requiring merchants to provide the important information consumers need to make enlightened choices as to the best currency in which to acquire goods or services with their bank card.
In 2017, the German organisation Stiftung Warentest sent 20 investigators to make withdrawals and payments in 13 countries not in the Eurozone, including Hungary, Poland and the Czech Republic. In 11 of the 13 countries, ATMs offered this service with an increase of the price paid of between 2.6% and 12%.
BEUC, which has called several times for this commercial practice to be banned, calculates that it costs European consumers billions of euro every year. It is also a long-standing request of the European Parliament, which criticised the lack of measures to tackle this practice in its report on the action plan on retail financial services (see EUROPE 11850).
The Commission is moreover expected to propose a modification of the regulation (924/2009) to ensure equal charges for national and cross-border transactions for payments in currencies other than euro. According to BEUC, users stand to save up to €900 million a year. (Original version in French by Marion Fontana)