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Capital Requirements Directive
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ID 1042. Currency conversion
Article 49(1) of Directive 2007/64/EC
Is this below mentioned example within the scope of PSD, if the payer's payment service provider changes the currency of the payment order(credit transfer)submitted by payer and carries out this payment order in different currency other than currency of initially submitted payment order ?
E.g: Payer submits to a bank a GBP payment order (credit transfer), but payee receives this payment not in GBP, but in the national currency of the country where payee's payment service provider is located. As a result payer receives the claim from the payee why the payment has been received in other currency than expected.
Does the payer's payment service provider have rights to change the currency of initially submitted PSD payment, provided that it is more convenient for payer's payments service provider to send this payment in the currency other than currency of original payment order ?
In accordance with Article 49 of the PSD, payments shall be made in the currency agreed between the parties. If a currency conversion is offered by the bank prior to the initiation of the payment transaction, the payer needs to agree to such currency conversion on the basis of the exchange rate and all related charges. In the absence of such agreement of the payer, the bank shall execute the payment in accordance with the given instructions, and may not freely change the currency of the transaction.
However, if the bank of the payee is located outside the EEA, Titles III and IV of the PSD, including Article 49, do not apply. The bank of the payer is only bound, in such a case, by the payment rules of the Member State where he is located (if existing), or by its contract with the payer.
Submitted on 11/05/2011