By Steve Ranger, 12 January 2007 13:20
NEWS
Rules about bank charges for cross-border euro payments have resulted in big savings for consumers and have encouraged banks to invest in new Europe-wide payment infrastructure, the European Commission has claimed.
After the full introduction of the euro, cross-border euro payments cost considerably more than an equivalent domestic payment. Also payment systems were organised by banks nationally and the infrastructures for cross-border payments were inefficient and slow.
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The regulation effort has provided an incentive for the payments industry to modernise its EU-wide payment infrastructure and represents an important step towards creating a Single Euro Payment Area (Sepa) for non-cash payments in Europe, the Commission said.
Sepa will sees banks replacing costly manual systems with cheaper electronic ones as they try to keep the cost of transactions down.
A 100 cross-border transfer, which would have cost 24 before the EU regulations were introduced, now costs 2.50, it said. The rules have also given banks an incentive to develop and invest more in an EU-wide payments infrastructure.
The banks' reaction has been very positive and they have set up an "ambitious" project to create Sepa which will treat all euro payments as though they are domestic ones, said EC internal market and services commissioner Charlie McCreevy.
He said in a statement: "By using fully automated payment systems that are of lower cost, this project has enormous potential to bring about huge savings and we fully support it."
Comments
There are 6 comments. Join the discussion
1. Timthy Gowan
This gives a strong argument why UK should join the euro. It must be a serious cost of doing business in europe to have to pay the iniqitously high exchange rate charge which the banks make to buy or sell Eueos.
2. Jeremy Robinson
Transfer charge from English Euro account to French Euro Account is now >20 Euros, so this is very good news.
I have a Euro account in England and a local French Euro account and send a cheque every month or two, so the charge of 20 Euros each time adds up over the year.
I sometimes take cash, which has no charge, but this is no good if I am not going over. Good news for the individual traveller.
3. Tim Sanders
2.5 euros still seems a lot to pay for something that would cost a few cents within the same country.
I wonder what the time scale is for the hoped-for improvements - and whether I will live long enough.
4. Richard Sarson
When I edited a European e-commerce magazine 15 years ago, I learnt that there are two rip-offs prctised by the banks on any cross-border enterpreneur. One was currency conversion. The other was bank charges on cross-border cheques. This raised my costs of selling outside the UK by around 10%.
For Eurozone countries, the first rip-off was stopped with the Euro, but I am amazed that the banks have been allowed to carry on the second rip-off until now. Was no new bank prepared to challenge the cartel. and drop its charges voluntarily for the sake of its customers? The moral is that no bank is prepared to reduce its exploitation of its customers unless regulation forces it to do so.
Continentals are now fortunate that they seem to have escaped both rip-offs at last. In the UK we still have to suffer both rip-offs, because no British political party has the guts to shake off the shackles of the pound.
5. Russ Lewis
As I remember the regulations, Euro cross-border transfers must cost the user no more than a domestic transfer. This means that, in some countries at least, Euro payments to other countries are free.
Taking Euros out of an ATM in Amsterdam with my French Carte Bleue is now free-of-charge. Buying Euro-priced goods from a German website is also free-of-charge. This is all as it should be in a so-called Single Market. There is, of course, still at least one remaining problem: Delivery systems. It still costs much more, in almost all cases, to get a cross-border delivery than a national one, even though there haven't been internal Customs barriers since 1993. Roll on a bit more regulation for the benefit of consumers.
6. Russ Lewis
Jeremy Robinson may still be paying too much for his transfer as it should cost no more than a domestic transfer. He should make sure he quotes the IBAN for the receiving account and the BIC for the receiving bank. (The regulation also only applies to payments up to EUR 12,500.-)
The relevant regulation is Regulation (EC) No 2560/2001 and this part came into force on July 1st, 2003.