The European Parliament has given the go-ahead to a new rule, which will reduce fees on cross-border euro transactions.

Under the new rule, cross-border payments in euro from member states outside the euro area will have the same charges as domestic payments in the local currency.

Until now, cross-border payments from euro area member states were relatively cheaper compared to euro payments from member states in the non-euro zone.

In some cases, member states in the euro area could make cross-border transactions for free.

On the other hand, member states in the non-euro zone would have to incur up to €20 for these payments.

The new rule aligns with EU’s idea of a single market, facilitating both individuals as well as businesses.

The rule also mandates banks, merchants or ATM operators to brief consumers about the currency conversion charges before they make a payment. The aim is to support consumers in choosing the option that is ideal for them.

Commission vice-president responsible for financial stability, financial services and capital markets union Valdis Dombrovskis said: “With this agreement, non-euro country citizens will also enjoy one of the benefits of the euro. That is, low-cost euro transactions using highly efficient euro payments infrastructure.

“Moreover, this regulation will boost competition in the area of currency conversion. And it will allow Europeans to easily check and compare conversion charges when paying abroad with their cards, or when sending money online to a country with another EU currency.”