European Commision takes new measures to combat Dynamic Currency Conversion practices

The Commission proposes a better deal for consumers in terms of fairer currency conversions everywhere in the Union. Today’s proposal will bring about transparency on payments that involve different Union currencies.

At the moment, consumers are usually not informed or aware of the cost of a transaction that involves a currency conversion. The proposal will therefore require that consumers are fully informed of the cost of a currency conversion before they make such payment (e.g. with their card abroad, be it a cash withdrawal at an ATM or a card payment at a point of sale, or online). This means they will be able to compare the costs of different conversion options to make a fair choice.

Recent findings show that consumers have been complaining about dynamic currency conversion practices – i.e. paying abroad in their home currency – and asking for their ban after having found that they were losing out in the majority of the cases studied. The lack of necessary information to make the best choice often results in consumers being unfairly led towards the more expensive currency conversion option.

Valdis Dombrovskis, Vice-President responsible for Financial Stability, Financial Services and Capital Markets Union, said: „Today’s proposal will require full transparency in currency conversion when consumers are paying by card in a country which does not have the same currency as their own.”

The European Banking Authority will be tasked with drafting the necessary Regulatory Technical Standard to implement this enhanced transparency.
The legislative proposal will now be submitted to the European Parliament and Council for adoption.

Source: European Commission