Payment service providers are obliged to implement some of the requirements of EU Regulation 2019/518 (“EU Fees Amendment Regulation”) by 19 April 2020. Card issuing payment service providers whose payment card is linked to the payer’s account are subject to additional obligations that have to be introduced by 19 April 2021. We have already looked into this at PayTechLaw: Christian Walz and Hugo Gottschalk considered the meaning and aims of the EU Fees Amendment Regulation in their posts on the draft of the EU Fees Amendment Regulation (Transparency and DCC as well as Regulation 924 (Reg 924). In his post on the EU Fees Regulation, Kemal Ahmedi reported on the main changes as well as applicable deadlines regarding information obligations, transparency and equality in charges. The German newspaper Handelsblatt also looked into this topic from a consumer perspective.
The aim of this post is to serve as a reminder for the implementation deadline on 19 April 2020 and provides an overview of the main obligations that need to be adhered to by 19 April 2020. For further information on the obligations that have to be introduced by card issuing payment service providers by 19 April 2021, we refer to the post on information obligations, transparency and equality in charges.
Obligations regarding currency conversions (Dynamic Currency Conversion (DCC))
A key change compared to the existing legal situation is the introduction of information obligations for payment service providers offering DCC at ATMs and terminals as well as currency conversions for online credit transfers. Payment service providers have to adhere to certain information obligations regarding DCC at ATMs and terminals as well as regarding currency conversions in connection with online credit transfers.
Information obligations regarding charges for currency conversions in connection with card-based payment transactions (no online credit transfers)
Article 3a of the EU Fees Amendment Regulation obliges payment service providers to publish the information listed in Article 3a in connection with card-based payment transactions. These mainly include:
- the entire fees for currency conversion as a percentage increase on the last available euro reference exchange rate of the European Central Bank (ECB);
- the amount to be paid in the currency used by the payee as well as in the currency of the payer’s account;
- a notification of the possibility to pay in the payee’s currency and to have the DCC subsequently carried out by the payer’s payment service provider.
The EU Fees Amendment Regulation obliges payment service providers to provide these information obligations to the payer at different points in time. Some of the information obligations have to be implemented as pre-contractual information obligations. Additionally, certain information needs to be provided prior to the initiation of the payment transaction at the ATM or terminal as well as subsequently.
Independent of the point in time, this information needs to be provided free of charge and in a neutral and comprehensible way. Please see below for more details:
Pre-contractual obligations for currency conversions in connection with card-based payment transactions
The obligation listed in number 1 above (currency conversion fees as a percentage increase on the last available Euro reference exchange rate of the ECB) compels payment service providers to provide the information to the payer prior to any contract and before the initiation of the payment service transaction. This must be done in a comprehensible and easily accessible way on a publicly available and easily accessible electronic platform.
Information obligations regarding ATMs and terminals in connection with card-based payment transactions
The information obligations listed in number 1 above also need to be clearly displayed at the ATM and/or the point of sale.
In addition to the information obligations listed in number 1 above, the payment service provider has to provide the information listed under number 2 (the amount to be paid in the currency used by the payee as well as in the currency of the payer’s account) and number 3 above (notification of the possibility to pay in the payee’s currency and to have the DCC subsequently carried out by the payer’s payment service provider) to the payer prior to the initiation of the payment transaction.
Subsequent information obligations in connection with card-based payment transactions
Additionally, any currency exchange fees due have to subsequently be provided to the payer in accordance with number 1 (above) as well as the amount to be paid in the payee’s currency and the currency of the payer’s account in accordance with number 2 (see above) on a permanent data medium.
Information obligations regarding online credit transfers via a website or mobile banking applications
Article 3b of the EU Fees n Amendment Regulation obligates payment service providers offering DCC in connection with credit transfers that are carried out directly online via the website or via a mobile banking application to provide the information listed in Article 3b of the EU Fees Amendment Regulation prior to the initiation of the payment transaction. These mainly include:
- the estimated currency conversion fees that apply to the credit transfer;
- the estimated total of the credit transfer – including any fees for payment transactions and currency conversion fees – in the currency of the payer’s account;
- the estimated amount to be transferred to the payee in the currency used by the payee.
The EU Fees Amendment Regulation does not clearly specify the point in time when the information listed in numbers 1 to 3 in the paragraph above need to be provided. Pursuant to the EU Fees Amendment Regulation, this information has to be provided prior to the initiation of the payment transaction in a clear, neutral and comprehensible manner. In our view, the way the law is phrased indicates that the information obligations in accordance with number 1 (estimated currency conversion fees applicable to the credit transfer) are to be understood as pre-contractual information obligations and the other information (listed in numbers 2 and 3 in the paragraph above) need to be provided (directly) before the initiation.
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