Regulation (EU) 2018/302 - EEA merchants can’t refuse your Curve card based on its country of issue

#1

Regulation (EU) 2018/302 came into effect on 3rd December 2018, which prevents merchants in the European Economic Area from discriminating against consumers based on:

  • The EEA member state in which the consumer is located (e.g. including according to IP address)
  • The consumer’s nationality
  • The EEA member state in which the consumer’s payment card is issued

With regard to using Curve, my reason for this post is the last point, because I am sure that many of you, like me, have experienced merchants refusing to accept foreign cards, including Curve which is issued in the UK. This is now unlawful, specifically breaching Article 5(1) of Regulation (EU) 2018/302, which states:

A trader shall not, within the range of means of payment accepted by the trader, apply, for reasons related to a customer’s nationality, place of residence or place of establishment, the location of the payment account, the place of establishment of the payment service provider or the place of issue of the payment instrument within the Union, different conditions for a payment transaction, where:

(a) the payment transaction is made through an electronic transaction by credit transfer, direct debit or a card-based payment instrument within the same payment brand and category;

(b) authentication requirements are fulfilled pursuant to Directive (EU) 2015/2366; and

© the payment transactions are in a currency that the trader accepts.

If you search for information about this regulation, commonly known as the Geoblocking Regulation, you will find a very useful FAQ for businesses, which is much easier to read than the raw legislation itself, although the raw legislation is available in 24 EU languages at the above link.

Before you get excited that you can now require an online retailer to send goods to anywhere in the EEA such as French Guiana, Campione d’Italia or the Canary Islands, the regulation does not require retailers to do so. A retailer can choose its delivery area, which can even be specific parts of one country. For example, many UK retailers do not deliver to Scottish Islands, let alone to other EEA countries. But a retailer cannot refuse to deliver to an address within its stated delivery coverage area by virtue of your home address being outside that coverage area.

Unfortunately financial services are excluded from the scope of the regulation, so ATMs are still allowed to charge fees to foreign cards but not to locally-issued cards, which is often the case in Spain and Greece for example.

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#2

How is that allowed? Any euro denominated card issued in the EEA should classify as a “domestic” card when used in any other EEA country

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#3

You make a great point.

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#4

The only legislation I’ve seen is imposed upon the card issuer, not upon the ATM operator. Therefore, although the card issuer cannot discriminate according to the country where you make a cash withdrawal, the ATM operator can charge whatever it likes and discriminate according to where the card is issued.

No doubt the EU will legislation against this in future, but it tends to separate legislation for financial services from general consumer legislation.

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#5

If all cross border intra EEA transactions in euros are to be classified as “domestic” and not “foreign” how can two classes of “domestic” exist? Isn’t that effectively what you’re suggesting to be the case?

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#6

The problem is that the legislation does not govern all cross-border intra-EEU transactions in EUR. Each piece of legislation governs a specific scenario, and unfortunately some loopholes appear to remain, for example charges by ATM operators.

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#7

There’s no loophole. ATM operators are classified as payment service providers (PSPs), meaning EC 924/2009 applies. Specifically art. 3 section 1 states:

“Charges levied by a payment service provider on a payment service user in respect of cross-border payments of up to EUR 50 000 shall be the same as the charges levied by that payment service provider on payment service users for corresponding national payments of the same value and in the same currency.”

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#8

I’m not sure where you read that ATM operators fall within the definition of payment service providers.

In Regulation (EC) No 924/2009, to which you refer, Article 2(5) states that “‘payment service provider’ means any of the categories of legal person referred to in Article 1(1) of Directive 2007/64/EC and the natural or legal persons referred to in Article 26 of that Directive, but excludes those institutions listed in Article 2 of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (6) benefiting from a Member State waiver exercised under Article 2(3) of Directive 2007/64/EC”.

Article 1(1) of Directive 2007/64/EC, to which the above refers, states:

This Directive lays down the rules in accordance with which Member States shall distinguish the following six categories of payment service provider:

(a) credit institutions within the meaning of Article 4(1)(a) of Directive 2006/48/EC;

(b) electronic money institutions within the meaning of Article 1(3)(a) of Directive 2000/46/EC;

© post office giro institutions which are entitled under national law to provide payment services;

(d) payment institutions within the meaning of this Directive;

(e) the European Central Bank and national central banks when not acting in their capacity as monetary authority or other public authorities;

(f) Member States or their regional or local authorities when not acting in their capacity as public authorities.

You can go on reading the further legislation referred to, but I have seen nothing that suggests that an ATM operator, in its capacity solely as an ATM operator, falls within the definition of a payment service provider. I hope someone will prove me wrong.

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#9

You should indeed have continued reading :wink:. The annex for EC 64/2007 defines payment service providers and states:

“2. Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.”

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#10

I’m still not sure that this causes ATM operators to fall within scope of Regulation (EC) No 924/2009. Even if the “payment service” falls within scope of Directive 2007/64/EC, the “payment service provider” (a different defined term) in this case might not fall within scope of Regulation (EC) No 924/2009, because Article 2(5) of that regulation references only Article 1(1) of Directive 2007/64/EC.

If a small handful of ATM operators were surcharging for withdrawals using non-domestic cards, then I could believe that this small number was breaching EU legislation. But given that nearly all Spanish banks charge for withdrawals using non-Spanish cards (but not using domestic cards), and licensed banks tend to be more compliant than independent ATM operators, I would find it very surprising that they were breaching the legislation.

Again, I hope that you will prove me wrong.

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#11

I think you’re really grasping at straws here, even if not intentionally. We’ve established that an ATM withdrawal is a “payment service” how can the business activity whose main and oftentimes only provided service is the ATM withdrawal not be a payments system provider?

Sources? As far as I know when you have a Spanish card and use an ATM of the card issuer you don’t pay fees. When using a Spanish card at an independent ATM or an ATM from a different bank you’re going through MC or Visa and pay the exact same fees as you would with any other EEA issued card

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#12

Because the definition of a “payment service provider” is potentially different in the context of Regulation (EC) No 924/2009 compared to the context of Directive 2007/64/EC. Regulation (EC) No 924/2009 references only one small part of Directive 2007/64/EC in this respect. As I said, I hope that you can prove me wrong.

I understand from the Revolut forum that Revolut started issuing cards with local Spanish BINs partially so that the majority of Spanish ATMs will see their card as Spanish and therefore not charge a fee.

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#13

Firstly, the directive is legally worthless since a directive is only the basis from which each country will make its own law. In practise you have 28 “directives” that are actually legally enforceable. You will never be able to match the terms and their scope with a regulation. If that was the standard that doubt would exist for pretty much any document ever made by the EU.

Secondly, I confess I never understood your doubt that an ATM operator is a payment system provider. Obviously ATM operators need to fall into some category. If not payment system provider, which regulation do you think better suits them?

TBH, as I have said previously, there’s more than enough proof that an ATM withdrawal is a payment service, thus dispelling any doubt that ATM providers are PSPs

If you want the Spanish case specifically, ATM withdrawals will cost the same for any EEA card, Spanish or not as the EU regulation obligates. The peculiar thing with the Spanish law is that the ATM fees instead of being charged directly by the ATM operator to the user as its often the case, they are entirely charged to the card issuer bank, which may decide to pass them on to the client or not.

That’s why Spanish ATMs will say you “might” be charged X amount for this withdrawal.

As for Revolut, having a Spanish BIN is about forced DCC, it won’t do nothing for the ATM fees.

Here’s the Spanish law for your perusal: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2015-10633

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#14

Greek banks starting to charge the fee because they can earn money from foreign cards.

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#15

We’re not questioning why Greek banks do this, but how they are allowed to do this within the constraints of prevailing EU legislation.

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#16

I think you might be wrong. I quote from your very helpful link above to the Spanish legislation:

  1. En caso de retirada de efectivo con tarjeta u otros instrumentos de pago, la entidad titular de un cajero automático no podrá exigir cantidad alguna a los clientes de entidades distintas autorizadas en España o de sucursales de entidades de crédito extranjeras que operen en España, sin perjuicio de la comisión que pueda exigir a la entidad emisora de la tarjeta o instrumento de pago.

I believe that using a Spanish BIN might qualify Revolut as falling under “sucursales de entidades de crédito extranjeras que operen en España”.

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#17

So, can merchants still refuse non-EEA cards?! Doesn’t this run afoul of Visa/MC rules?

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#18

You need to read it to the end. In essence the ATM operator can’t directly charge the client no matter if the card issuer is Spanish or foreign. It isn’t an exception as you suggest, it is in fact saying the same rule applies to both cases.

It then says “sin prejudicio…” saying the ATM operator can instead charge the issuer who will decide if the fee is passed on to the client or not as discussed earlier.

That’s exactly what happens with current revolut cards when the ATM says “your bank may charge you x”. That is allowed also for Spanish institutions or foreign ones operating in Spain, so how would it be any different?

Not to mention EU rules guarantee that any EEA country counts as “Spanish”. A lot of countries still do that kind of stuff out of national pride or constitutional obligation

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#19

The thing with MC/Visa rules is that they all apply unless local law says otherwise, the rules themselves say exactly that, so it depends on the laws of each country. Some countries specifically say merchants are allowed to refuse at their sole discretion non EEA cards

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#20

Greek banks were allowed to infringe on some of the European rules due to the financial crisis and it seems that special status isn’t over yet. The EU literally said they would turn a blind eye for a while.

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