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ESBG to EU Commission: Don’t expand EU cross-border payments rule to non-euro transactions

ESBG to EU Commission: Don’t expand EU cross-border payments rule to non-euro transactions

​​​​​​​Says non-euro transactions a sliver of euro-zone total

>> Read: ESBG response to consultation

>>See: European Commission consultation document

BRUSSELS, 30 October 2017 ​ There is no need to expand the cross-border payments rule –Regulation 924/2009 – to non-euro transactions, ESBG argues in a response sent Friday to the European Commission consultation document on transparency and fees in EU- cross-Border transactions.

ESBG posits that Article 14 of the Regulation 924/2009 already allows EU member states that do not have the euro as its currency to extend the application of this regulation to their national currency. It adds that the principle of subsidiary should be maintained and the legal tool to extend the above-mentioned regulation to all currencies of Member States should continue to be article 14. In general, the association further argues that cross border payment transactions that involve a currency conversion entail a considerably higher cost than transactions limited to a single currency.

Non-euro transactions a sliver of euro-zone total

Data analysed by ESBG support the higher-cost claim. It estimates that only 0.82% of all transactions within the euro area involve a transaction in a currency other than the euro. ESBG also points to a McKinsey Global Payment Map for 2016, showing the cost of an international payment comprises following elements:

  • ​Payment operations: 7%
  • Nostro-vostro liquidity: 35%
  • Claims and treasury operations: 27%
  • Compliance: 13%
  • FX costs: 15%
  • Network management and overhead: 3%

Through a payments lens, ESBG sees a need to question what incentives could remain for countries that are willing to join the euro area when their citizens are given the same advantages by harmonising their transaction fees. In fact, all EU countries – bar those that opted out – need, at some point in time, to meet the conditions for adopting the single currency. Commission efforts could be better focused on the latter than focusing on the interim symptoms of fees for cross border transactions in non-Euro currencies within the European Union.

ESBG encourages the EU executive body that when considering eventual proposals in relation to this action, it takes into account possible individual higher fees for non-SEPA transactions largely based on higher transaction costs. It also calls for proposals to reflect the size of the institution performing such transactions and the frequency thereof.

​Background on non-euro transactions

According to the European Commission, EU citizens who need to make transactions that involve EU currencies of EU Member States other than the euro still face major costs and obstacles which stand in the way of a deepening of the internal market. These issues were raised in its Green Paper on retail financial services. The feedback to the Green Paper indicated that opaque and potentially excessive fees are a deterrent to cross-border transactions within the European Union, particularly when they involve non-euro currencies. Following the Green Paper consultation, the European Commission presented an Action Plan on Consumer Financial Services that set out further steps towards a genuine technology-enabled single market for retail financial services where consumers can get the best deals while being well protected. This public consultation focuses on actions 1 – already included in the 2017 Commission work programme – and 2 of the action plan that aims at collecting feedback on transaction fees and currency conversion.


Payments; European Supervisory Authorities (EBA-ESMA); European Institutions