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Cross Border Payment Regulation: What is it and how does it impact cardholders?

DCC Forum

After a lengthy examination by the European Commission into on how to improve choice, transparency and competition in retail financial services, new rules have come into play to bring greater transparency when we are paying for goods and services abroad. We have taken a look at what this Regulation is and what it means for cardholders and merchants.

What is it?

The European Commission looked specifically at the currency conversion charges for cross border payments. As a result of the discussions, the Commission has implemented new Regulation that aims to bring greater clarity to cross border payments. The new rules will require both providers of Dynamic Currency Conversion (DCC) and providers of traditional international card payment services provide more information on fees and the rates at the point of purchase so that consumers can make more informed decisions on the payment option that suits them best.

What does this mean for cardholders?

This legislation is designed to benefit cardholders abroad when making a choice on which payment option to use. The reality is that cardholders - be they holidaymakers or business travellers - aren't going to notice a wealth of changes that alter the experience in a shop or at an ATM considerably. Before a transaction takes place, they will be presented with some key pieces of information on screen, which will enable them to make an informed choice on how best to complete the payment.

This information includes two values - the DCC value in their home currency and the non-DCC value in the local currency, the comparable exchange rate being offered and finally the percentage mark up being applied, which will be calculated against the European Central Bank (ECB) reference rate. The intention is that, in providing this additional detail, the cardholder will be more confident and better informed on the option that best suits them. They can also speak to whoever is facilitating the transaction for more information on both options, which should provide them with additional support and understanding to complete the transaction.

A welcomed change

As an organisation, the Forum welcomes the additional measures introduced by the EU Parliament and the EU Council as proposed by the EU Commission, which align closely with and cement our overarching principles of choice and transparency for cardholders abroad. We are committed to supporting our membership in the roll out of the requirements, to ensure the DCC service is delivered in a compliant manner.

For more information or any questions around the Cross Border Payment Regulation please contact us on info@dccforum.com