Surcharging

Is a ‘foreign exchange margin’ or 'currency conversion fee'  different from a ‘surcharge’ and do different foreign exchange margins above the ECB mid-market rate not constitute a surcharge?

Recital 66 of PSD2 refers to ‘charging for the use of a given payment instrument (surcharging)’. In some cross-border situations Payment Services Providers (PSPs) or merchants may wish to accept a payment from a consumer in the consumers’ own currency. Through doing this, the merchant or PSP may take on risk in the form of movements in the foreign exchange market, however, the consumer would benefit through having additional choice of ways to pay. Once the funds are collected from the consumer, the PSP or merchant would gather all funds received in that currency and conduct a foreign exchange transaction with its own credit institution, into the PSPs own currency. This would occur on a periodic basis, typically at the end of each business day. However, when providing a rate to the consumer the PSP may not know the precise foreign exchange rate which the PSP itself will be charged at the end of the day and therefore must approximate the rate which to charge its own consumer. In some situations, relative to the ECB mid-market rate, the consumer would have inadvertently been charged a fee or margin (when the amount charged to the consumer is higher than the rate the PSP paid) and in other cases a discount (when the amount charged to the consumer is low than the rate the PSP paid). There appears to be confusion amongst consumers and merchants in non-Euro EU countries where merchants or PSPs who wish to provide choice and convenience are being accused of surcharging where this is not the case. Specifically in ticket purchases, such as airline tickets or utility bill/invoice payments. These companies may wish to offer the consumer the ability to pay in their local currency rather than the PSP or merchants currency.