The European Union has reached a significant political agreement on revising the legislation regulating payment services, signaling an imminent fundamental change in the way cashless payments are made, but also in how citizens access cash.

However, since this is a provisional political agreement, the final regulation still has to undergo formal approval and technical refinement, which means minor deviations are possible before it enters into force.

The aim of the new rules is to significantly strengthen the fight against growing financial fraud, increase consumer protection, and ensure better fee transparency for all citizens of the European Union, including Croatia.

The agreement, reached by the Council of the European Union and the European Parliament, introduces a new Payment Services Regulation and amends the existing Payment Services Directive (currently known as PSD2), thus creating a more modern and secure framework for payment transactions.

Access to cash becomes easier, especially in smaller towns

One of the most concrete developments for citizens concerns cash withdrawals. The new framework for payment transactions will significantly improve the availability of cash, especially for residents in rural or less densely populated areas where ATMs and bank branches are becoming increasingly rare. As banking infrastructure in smaller communities continues to weaken, the European Union is using this rule to ensure that residents of these regions do not have to travel long distances just to withdraw money.

Retailers, such as supermarket chains like Kaufland, Lidl, or others, will be allowed, but not required, to offer a cash withdrawal service without the obligation to make a purchase. In this way, consumers will be able to withdraw an amount of up to 150 euros or the equivalent in national currency directly at the checkout. It should, however, be noted that this amount is not a confirmed obligation, nor is it guaranteed in all member states. States may apply stricter limits.

In an earlier version, a limit of 100 euros was proposed, and the precise implementation will depend on the final rules in each individual member state.

To prevent abuse, the transaction will have to be confirmed using a chip and PIN.

Practicality surpasses the ATM

This change is particularly practical for elderly citizens and people who do not have a car, because the trip to the nearest shop is often significantly shorter and more accessible than the trip to the few remaining ATMs or bank branches. For financial institutions, maintaining and servicing ATMs represents a significant cost, so reducing their number in less profitable regions has become common practice.

This is precisely where the practicality of this EU rule lies: it effectively shifts the cash withdrawal service from banking infrastructure to the widely distributed retail network. This directly makes everyday life easier for citizens, especially those most affected by the closure of bank branches, providing them with a faster and simpler service in their immediate vicinity. However, it should be emphasized that the availability of this service will depend on the retailer's own cash supply, which means the shop must have enough money in the till to pay out the requested amount.

New tools for drastically reducing fraud

Although improving access to cash is an important part of the package, an equally crucial, if not the most important, focus of the new legislation is combating increasingly sophisticated forms of payment fraud. A comprehensive anti-fraud framework is being introduced, with an emphasis on so-called 'spoofing', where fraudsters falsely present themselves as payment service providers, for example banks, in order to gain users' trust and induce them to carry out fraudulent transactions.

To protect users, payment service providers, banks, and financial institutions will have to actively exchange information related to fraud with one another. In addition, an obligation is being introduced to verify the recipient account's IBAN against the corresponding name of the bank account holder before executing any money transfer. Such verification is already applied to instant euro payments, and it is now becoming the standard.

Moreover, payment service providers will be liable and bear the cost if they fail to fulfill their obligations in applying certain preventive anti-fraud tools.

Full transparency of fees and advertising

The new rules bring greater fee transparency for all participants in the market.

ATM service providers will be legally required to clearly display to users in advance all fees charged, as well as the applied exchange rates, before the transaction is confirmed. Companies that offer card payment terminals to merchants will have to clearly state the fees they charge for these services.

In addition, large online platforms and search engines may advertise financial services to users in a member state only if the provider of those services is properly regulated and authorized to operate in that country.

Finally, in order to prevent confusion and reduce the number of consumer inquiries to banks, merchants must ensure that their usual trade name matches the name that appears on clients' account statements.

In conclusion, as stated by Morten Bødskov, the Danish minister for business, industry, and financial affairs, this agreement 'paves the way for a safer, more efficient, and more consumer-friendly payment environment for all Europeans'.

The agreement must now undergo technical refinement before final adoption.