EU Cross-Border Payments Legislation: Is your payments card business ready?

The amended EU Cross-Border Payment Regulations (924/2009) come into force in April 2020; less than six months away. The amendment creates a common approach for issuers and acquirers to communicate the price of cross-border (FX) transactions to consumers and heralds a new era in pricing transparency on cross-border activity.

April 2020 Deliverable

By April 2020, all payment card issuers must clearly present a total currency conversion cost per card product per day on a publicly available website. Compliance requires that all fees, commissions and exchange rate premiums are consolidated into a single currency conversion cost that will be compared to the daily ECB reference, with the difference between the two expressed clearly as a percentage (%).

At a minimum, card issuers will have to publish a daily table of currency conversion costs per card product across all relevant currencies, further complicated by:

  • Variable cross-border transaction fee structures across products (i.e., debit, credit, commercial, etc) requiring multiple disclosures to cardholders.

  • Variable issuer currency conversion fee structures within products. For example, many banks charge a minimum currency conversion fee for some card products, which means the total currency conversion cost comparison for low value transactions (such as common contactless purchases) will be different (higher) than for higher value transactions.

  • Variable scheme margins by currency. MasterCard & Visa have different approaches to setting the exchange rates used by their programmes, resulting in differing exchange rate premiums by currency and by day. At a minimum, each issuer will be required to calculate the daily currency conversion cost across each relevant currency

  • Mismatched timing among the various currency rate sources (schemes vs ECB). This timing gap creates further complexity in the rates comparison analysis and further volatility in the exchange rate premiums to be included in the currency conversion cost.

Cambrist & fxNOTIFY

fxNOTIFY is a fully managed service that delivers currency conversion cost comparisons, per the regulation, for each card product issued. fxNOTIFY provides card issuers with a simplified path to full compliance before the April 2020 deadline, via our turn-key set-up and flexible deployment models. Send an email to info@cambrist.com to learn more.

David Fitzgerald