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Single European Payments Area
When the euro was first introduced in 1999, all member states in the Eurozone continued to operate their own segregated national banking systems. This resulted in continued high charges for cross border transactions, for credit/debit/charge card payments, cash withdrawals and bank-to-bank transfers. Therefore the European Parliament enacted Regulation (EC) No 2560/2001. Article 3 of the Regulation mandates that a bank must charge the same for a cross-border EUR transaction as it charges for a domestic EUR transaction within the member state in which the bank operates. Since most domestic transactions within member states are free of charge or very low cost, this resulted in cross-border EUR transactions in the Eurozone being likewise free of charge or very low cost. Cheques were excluded from this requirement, which have in any case been phased out in many European countries in favour of more modern and efficient forms of payment.
Sweden chose to implement the Regulation to apply equally to SEK and EUR transactions. Therefore a bank in Sweden must charge the same for a cross-border EUR or SEK transaction as it charges for domestic EUR or SEK transactions.
The United Kingdom implemented the Regulation through the Cross-Border Payments in Euro Regulations 2003, which do not additionally cover GBP transactions. Therefore banks in the United Kingdom must charge the same for a cross-border EUR transaction as they charge for a domestic EUR transaction within the UK. In practice, most domestic EUR transactions within the United Kingdom are chargeable (often for incoming as well as outgoing payments), so banks in the United Kingdom are at liberty to continue charging hefty fees for cross-border EUR transactions. The amount charged by banks for GBP transactions is not relevant under the legislation.
French banks continued to charge more for cross-border EUR transactions than they charged for domestic EUR transactions. They achieved this by imposing a charge for paper-based transactions and no charge for transactions initiated by internet banking, but cross border payments were usually excluded from internet banking. This non-adherence to the Regulation has since ended, as French banks now allow cross-border EUR payments to be initiated by internet banking.