EU Ruling on Internet Payments Technology
On 15 November 2001 the European Parliament approved a proposal on cross-border transaction fees within the European Union. The decision means that banks across the European Union will be obliged to significantly reduce the fees they charge to customers for handling cross-border payments. Under the regulation, banks will be forced – by March 1 2002 – to ensure parity in pricing between domestic and cross-border electronic payments within the Eurozone. High cross-border transaction processing costs are incurred by non-standardized and inefficient customer interfaces, and a low degree of automation in banks’ internal systems. In addition, formats within a bank are rarely compatible with the formats used by banks in another country. Customers do not always supply data in full, meaning that many cross-border payment orders have to be rectified by the banks at significant extra cost. Under the new European regulation, banks face the prospect of losing money on every cross-border transaction they make.