When will regulators run out of patience with card issuers on CBPR2 compliance?
The CBPR2 (EU2019/518) legislation imposed a 19th April 2020 deadline for the initial FX rate transparency requirements for card issuers across Europe. The legislation states that payment card issuers are to:
“make the [FX] mark-ups … public in a comprehensible and easily accessible manner on a broadly available and easily accessible electronic platform"
The general interpretation of this requirement is that card issuers will present their total cross-border card fees (which is the cumulative of the daily scheme FX margin and issuer mark-ups) as a percentage (%) comparison to the daily ECB reference exchange rate on publicly accessible webpage. The goal of this requirement from a regulatory perspective is to enable consumers to “pull” clear & transparent FX rate pricing directly from their own card issuing bank’s website which allows for easy comparison of their bank’s charges vs. other forms of foreign exchange (e.g. DCC acquirers, bureau-de-change, etc.).
A Slow Start
As of July 13th, Cambrist research of European markets showed ~40% of card issuing banks to be compliant with the regulations. Compliance varies significantly across different markets, where some markets (such as Ireland and Sweden) show widescale adoption of the regulation, other markets (such as Romania and Malta) show more limited compliance.
Two factors driving delayed compliance include:
Confusion over the scope of card issuer compliance obligations. For many banks surveyed, the CBPR2 is interpreted to impact only acquirers, rather than all payment service providers (issuers and acquirers).
The EU Commission has attempted to resolve this confusion via a CBPR2 Factsheet (https://ec.europa.eu/info/files/190515-proposal-cross-border-payments-factsheet_en) which highlights the card issuer mandate by stating that “when you pay with your card abroad, you will be duly informed (of the currency conversion cost) by your own bank in the terms and conditions and on a publicly available website”.
Deferred deadlines due to Covid-19. In April, the EU Commission issued a statement offering local regulators “flexibility” when enforcing the 2020 regulatory deadline in light of Europe’s Covid-19 pandemic, stating that National Competent Authorities may enforce these new rules “in a flexible manner, taking a reasonable approach towards PSP’s ability to implement the new rules while at the same time preserving the stability and continuity of online banking interfaces”. As a result, there are varying deadlines being imposed across the EU markets. Some regulators have given specific deadline extensions, while others have retained a degree of ambiguity on the deadline.
It is now almost three months since the original April deadline and the peak of Europe’s Covid-19 pandemic has passed. Therefore, regulators are likely to start to losing patience with card issuers that continue to be non-compliant with the 2020 mandate, particularly given the fact that the second stage of the regulation’s requirements, which are much more onerous, come due in April 2021.
Simplify your Bank’s Compliance with Cambrist’s fxNOTIFY
If you are not yet compliant with the CBPR2 and/or are just in a planning stage, Cambrist’s fxNOTIFY solution provides a fully managed service that delivers either individual modules or a complete solution to ensure your bank’s compliance with the CBPR2 for both the 2020 and 2021 requirements.