The European Commission is proposing legislation which would prohibit banks from levying additional charges for cross-border euro payment transfers. The proposed regulation, which follows a sustained campaign by the EC and consumer lobby groups for the creation of a single market for low-value payments, will apply from 1 January 2002 for card payments and cash dispensers and from 1 January 2003 for bank transfers and cheques.
Introducing the changes, Commission president Romano Prodi says: "It is unacceptable that the advantages of the single currency should not be passed on to individuals. Without our proposal, consumers and small businesses would have to pay far too much to use the single currency in another Member State, which could make the euro less attractive."
The Commission has consistently argued for the creation of a single payment area. Earlier this month it released the results of a study carried out in March 2001 which shows that the average price of a transfer in the euro zone is €17.36, a slight increase from 1999. The average is based on 350 transfers carried out mainly in border areas.
Internal market commissioner Frits Bolkestein notes that "for eleven years the Commission has been exhorting the banking community to construct payment systems adapted to the internal market. The single payments area, an essential corollary of the euro, must become a reality. Why should a payment in euros from Turin to Nice be more expensive than a payment from Turin to Palermo? Crossing a border should not cost the customer more."
As for the content of the proposal, he states that "the aim of this proposal is not to regulate prices, but to establish the principle of non-discrimination between charges for domestic and cross-border payments. Each bank would still be free to set its charges as it wished. The text also provides that banks should make the charges payable by their customers more transparent."
The draft regulation makes it mandatory for banks to use the IBAN (International Banking Account Numbering) system. It will be submitted to the EU’s Council of Ministers and the European Parliament for fast-track approval and uptake without any need for implementation into national law.