Whether in Copenhagen, Budapest, Danzig or Dubrovnik: most consumers only get to know how much withdrawing cash at a cash dispenser within the EU - but in another currency than the euro - actually costs, a few days later when they look at their bank statement. Based on a proposal to review the regulation as regards charges on cross-border payments, the Commission wants to provide more transparency and lower costs for customers. Bank transfers between Euro countries and Member States that do not have the Euro shall also become cheaper.


Nine out of 28 Member States still have their own currency. Anybody who transfers money to these countries or withdraws cash from a cash dispenser abroad is sometimes surprised how high fees are, which banks charge for such services. Whilst within the Eurozone, such bank transfers or withdrawals may not cost more than at home, this rule does not apply to the EU area, which uses another currency than the Euro. A Commission proposal from 28 March 2018 is to remove this unequal treatment.


The Proposal of the Commission includes two elements, based on which the EU wants to come a step closer to the completion of the Single Market: one element concerns money transfers between euro countries and EU countries that do not have the Euro. The additional fees, which banks are allowed to charge for these transfers, are often significantly higher than within the Eurozone. The Commission quotes cross-border transactions from Bulgaria to Finland as an extreme example; banks charge up to 24 euro for this service. The proposal now provides for transactions not only not to cost more within the Eurozone than domestically, but that this also applies everywhere in the EU. Hence, two-digit Euro amounts for additional fees shall be a thing of the past.


The second element, which the Commission wants to change, refers to the so-called “dynamic currency conversion”. If a customer pays by card or withdraws cash at an ATM, he or she can often choose whether the money to be withdrawn should be in the local currency or in their home currency. However, in most cases customers are not provided with the information as how much their payment or withdrawal would cost in both cases. In future, consumers shall be given this information in advance, so that they know, which cost to expect.


Due to the fact that the Commission is aware that banks need to undertake extensive technical changes, it proposes a transition period of 3 years. Apart from that it will depend on the negotiations with the European Parliament and the Council whether and when respectively the Regulation will indeed come into force. It is only slightly more than a year until the legislative period of both the EU Parliament and the Commission comes to an end. If the negotiations for current proposals are not complete by May 2019, it could take some years until they in actual fact become a European reality.


Further Information:

European Commission: A better deal for consumers - Cheap euro transfers everywhere in the Union and fairer Currency conversions

Commission Proposal as regards charges on cross-border payments