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Brussels, 23 May 2000

Bank charges: Commission urges banks and Member States to cut costs

The European Commission is urging banks and Member States to do much more to bring down the cost of small-value transfers between Member States and other cross-frontier operations. The statement has been prompted by the results of a survey undertaken by an independent institute for the Commission in the 11 euro-zone countries, which reveals that consumers are still being charged on average a fee of €17.10 for transferring €100 between Member States. A domestic credit transfer normally costs less than €1. Moreover, in 25% of cases the recipient was charged part of the costs of the transfer despite the specific request that all charges should be borne by the originator. Unauthorised double charging violates the cross-border transfers Directive (97/5), which was to be implemented by August 1999. Costs for exchanging cash average 3.3% for €100 and 7.07% for €50. Withdrawals from cash machines in EU countries other than where the bank card is issued are about 3.84% for €100 and credit card charges can be 0.79% on top of the annual cost of card membership.

In a joint statement Internal Market Commissioner Frits Bolkestein and Consumer Protection Commissioner David Byrne said: "The results of this survey are disturbing, particularly in terms of widespread double-charging, costs for exchanging euro-zone currencies and charges for using cash and credit cards in other Member States. In the case of double-charging, we will have to be particularly vigilant that Member States ensure that banks respect their obligations under the cross-border transfers Directive. It is not sufficient for Member States to simply put the Directive on their statute books they have an obligation to ensure that its provisions are applied in practice."

"If the results of this survey are confirmed, the Commission may decide to open infringement procedures against them for incorrect application of the Directive. We also strongly encourage consumers themselves to complain to the ombudsmen that exist in each Member State if they encounter problems with cross-frontier transfers. As the Commission stated in its recent retail payments Communication, banks themselves need to do more in terms of improving the infrastructure for handling small-value cross-frontier transfers and, as regards charges for credit and cash card transactions, phasing out discrimination between domestic and cross-frontier operations. Otherwise, consumers and businesses will be unable to reap the full benefits of the Internal Market and the single currency".

Banks are free to set charges for cross-border transfers according to their own commercial criteria. However, the cross-frontier transfers Directive (97/5) requires banks to ensure transfers of small sums (up to €50,000) are as inexpensive, secure and efficient as possible. The Directive also:

  • Outlaws unauthorised double charging (all transfer costs are to be paid by the originator unless the originator explicitly agrees that the recipient can also be charged);

  • Requires cross-border credit/debit transfers to be completed within 6 days;

  • Requires banks to provide clear advance information to customers on tariffs


  • Requires Member States to nominate an ombudsman to whom consumers may complain.

The Commission is pursuing infringement proceedings against Italy for failing to implement the Directive fully into its national legislation.

Consumers who encounter problems such as double-charging when making cross-frontier transfers should contact the national ombudsmen which exist in each Member State. For its part, the Commission will be closely monitoring the application of the Directive, and in particular problems of the type highlighted by this latest survey, such as unauthorised double charging and excessive delays (5% exceeded the 6 day limit). A meeting with Member States to discuss this issue is planned for 22 June. If Member States consistently fail to ensure the Directive is applied correctly, the Commission will consider opening infringement procedures against them.

It is also recalled that in response to complaints, the Commission's competition department in February 1999 opened a cartel investigation into bank charges in the euro-zone. The investigation, which is still ongoing, focuses in particular on price-fixing for notes and coin currency transactions and cross-border transfer payments.

The Commission's Communication on "Retail payments in the Internal Market" (see IP/00/108) identified the fact that the development of cross-frontier payment infrastructure has lagged behind development of electronic transfer systems at the domestic level as the major source of problems affecting small-value cross-frontier transfers. It called on banks to improve linkages between transfer and clearing systems, to develop existing alternative transfer systems (such as those between groups of banks and those used by international credit cards) and to implement existing international standards on bank account numbers (IBAN) and payment instructions (IPI). The Commission is actively encouraging banks and other interested parties to implement these recommendations and is monitoring progress.

The survey also found inter alia that:

  • Cross-border transfers are in general, despite some improvements, still more expensive than domestic transfers despite the elimination of exchange rate risk between euro-zone countries;

  • Considerable differences exist between Member States for cross-frontier transfers. For example, the average cost in Luxembourg is €8.15, while in Portugal it is €25.13;

  • For the same transfer, there are considerable price differences in the same country between banks and between payment methods;

  • There are even considerable differences in costs if you transfer the same amount and at the same time between the same two banks situated in different Member States.

On the positive side, the study found that:

  • In all cases the correct euro conversion rate was used for cross-border transactions;

  • Charges for a cross-border transfer are lower than in 1994 when a survey was last done for the Commission.

For a summary of the survey's results and a list of ombudsmen in each Member State, see MEMO/00/26. The full text of the survey is available on the Europa internet site at the following address:

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