Cross-border payment regulation (CBPR)
To comply with EU Cross-Border Payment regulation (EU 2021/1230) and to deliver a great experience to your customers and cardholders, Enfuce provides a solution to disclose the exchange rates used for card payments to the end-user. By disclosing the exchange rates and providing an independent benchmark, your customers enjoy transparency by easily and conveniently being able to access and compare the exchange rates that are applied to their card payments.
The legislation in short from an issuer's viewpoint
Cross Border Payments Regulation (CBPR) / (Article 3a) Currency conversion charges related to card-based transactions
§1 “payment service providers… shall express the total currency conversion charges as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the European Central Bank (ECB). That mark-up shall be disclosed to the payer prior to the initiation of the payment transaction.
§2 Payment service providers shall also make the mark-ups referred to in paragraph 1 public in a comprehensible and easily accessible manner on a broadly available and easily accessible electronic platform.
§5 The payer’s payment service provider shall, for each payment card that was issued to the payer by the payer’s payment service provider and that is linked to the same account, send to the payer an electronic message with the information referred to in paragraph 1, without undue delay after the payer’s payment service provider receives a payment order for a cash withdrawal at an ATM or a payment at the point of sale that is denominated in any Union currency that is different from the currency of the payer’s account.
Notwithstanding the first subparagraph, such a message shall be sent once every month in which the payer’s payment service provider receives from the payer a payment order denominated in the same currency.
§6 The payment service provider shall agree with the payment service user on the broadly available and easily accessible electronic communication channel or channels through which the payment service provider will send the message referred to in paragraph 5.
The payment service provider shall offer payment service users the possibility of opting out of receiving the electronic messages referred to in paragraph 5.
The payment service provider and the payment service user ‘**may agree that paragraph 5 and this paragraph do not apply in whole or in part where the payment service user is not a consumer. **’
§7 The information referred to in this Article shall be provided free of charge and in a neutral and comprehensible manner.
Enfuce's solution and issuer responsibility
We provide a solution that allows disclosing card exchange rates prior to the payment transaction, as well as sending an electronic message after the transaction. Your responsibility is:
to make the exchange rate mark-ups (pre- and post-transaction) easily accessible for the cardholder
- To provide the means to opt out from receiving the post-transaction electronic messages
- To provide monthly messages
- To agree with corporate customers if this is not applied
The Enfuce solution is split into two APIs,
- Pre-transaction disclosure: an API that allows your customer to check the card exchange rate prior to a purchase being done
- Post-transaction disclosure: an API that will inform the cardholder about the card exchange rate applied to the purchase immediately after the purchase.
Pre-transaction disclosure: Exchange rate API
With the Exchange rate API, the issuer gets the current card exchange rate of the payment scheme and the equivalent exchange rate offered by the European Central Bank (ECB) for comparison. Additionally, the API offers the possibility to conveniently convert a specific amount.
For the payment scheme both options, rate (fxRateVisa/fxRateWithAdditionalFee) and amount (toAmountWithVisaRate/toAmountWithAdditionalFee), are available with and without the mark-up defined by the issuer. If you’ve opted for a 0% markup then the amounts and rates are the same.
For the benchmark, in this case, the ECB, the API returns the rate (benchmarkFxRate) and the amount(toAmountWithBenchmarkRate). It should be noted that the ECB only provides benchmark rates for 32 currencies (Euro foreign exchange reference rates) which exceeds the regulation requirements but limits a global solution.
With this information, you can access the relevant rates, as well as easily derive the difference in percentage between these as required by the regulation. You are responsible for having this information easily accessible in an easily understandable manner for your customers. In practice, this means that the cardholder should be able to access the information at any time to independently and transparently be able to compare the exchange rate on the card and ECB.
Post-transaction disclosure: Notification API
With the data in Notification API, you get the current card exchange rate of the payment scheme in addition to the potential markup added by Enfuce and the equivalent exchange rate offered by the European Central Bank (ECB) for comparison.
Enfuce introduces a new field “ecbRate” to the Notification message for authorisations to support you with complying with the regulation. The updated API documentation is shown below. This field will be available for all everyone who receives notification messages for authorisations.
In the TRANSACTION message of the Notification API, dividing the settlementAmount + feeAmount with the transactionAmount and comparing the result with the ecbRate , will allow you to determine the difference in exchange rates.
Use case: Cross-border payment
| Use case step | Message | Explanation |
|---|---|---|
| Customer makes a purchase for 10.50 USD and decides to pay in local currency. | Issuer receives transaction message from Enfuce API: “settlementAmount”: { “amount”: 8.76, “currency”: “EUR” }, “transactionAmount”: { “amount”: 10.50, “currency”: “USD” }, “feeAmount”: { “amount”: 0.18, “currency”: “EUR” }, “ecbRate”: “0,82873” |
Purchase is 10.50 USD (“transactionAmount”)The amount charged from the customer is 8.76 EUR (“settlementAmount”) + 0.18 EUR (“feeAmount”) = 8.94 EUR. This results in a card exchange rate (EUR/USD) of 0,85142. |
| Real-time notification sent to (your) Customer by the issuer | $10.50 (€8.94) spent at Restaurant Restaurant, City, Country Markup over ECB: 2.74% Exchange rate $1 = €0.85 |
The difference between the card exchange rate and benchmark rate is: 0,85142/0,82873 = 1,0273792 → 2,74% difference. The issuer will need to send a push notification/alert to the cardholder with the % markup over ECB. Alternatively, this can be included in any existing push notifications about the transaction. |
For the issuers that are in the scope of the regulation (EU 2021/1230), it is also mandatory to enable the cardholder to opt out of exchange rate notifications. The responsibility to implement this is on the issuer/app provider, and they should be able to limit whether these notifications are sent to your customers or not. Enfuce will include the “ecbRate” in every message.
Minimum requirement for post-transaction disclosure
The regulation stipulates a minimum level of notifications that need to be sent to the end-user. According to guidelines issued by the European Banking Federation “Whilst the electronic message needs only to be sent after the first ‘in-scope’ payment order made using the card (and not for every subsequent ‘in-scope’ payment order), it must also be sent once every month in which the issuing bank receives from the payer a payment order denominated in the same currency.” This means that at minimum, your customers need to receive:
- One message per month for each currency pair (please see EBF guidance for more details)
- Example:
- Card in EUR
- Month: January
- 1st – 5th of January: 10 transactions in SEK → one notification after the first authorisation has to be sent informing the mark-up for the SEK<>EUR exchange rate
- 8th-9th of January: 5 transactions in USD → not in the scope of regulation, no notifications needed
- 31st of January: 1 transaction in PLN → one notification after the authorisation has to be sent informing the mark-up for the PLN<>EUR exchange rate
- Card in EUR
- Example:
If you send notifications for each authorisation and include the exchange rate mark-up in each of them, no separate messages informing solely about the exchange rate mark-ups are needed to meet the regulation.