Source: Legal Update May 2022, Weinhold Legal
On 11 May 2022, the Senate approved a bill to amend Act No. 370/2017 Coll., on Payment Transactions, as amended, and other related acts (the "Amendment Act").
The Explanatory Memorandum to the Amendment Act states the main reason for its adoption as technical changes, responding to problems arising from the application practice of the Payment Transactions Act.
However, the Amendment Act does not only introduce technical changes, it also introduces public sanctions for breaches of the conditions for the provision of the Dynamic Currency Conversion service and introduces new licensed categories of providers of this service, which should result in greater protection for bank customers when making card payments abroad or when withdrawing money from ATMs, as well as greater protection for foreign tourists when making such payments domestically.
Dynamic conversion involves the immediate conversion of the amount charged into the currency in which the customer's bank account is held. It therefore offers payment of the transaction directly in Czech crowns, not in the currency of the country in question, but at an exchange rate that is usually disadvantageous for the client.
In addition, there is a new obligation to inform the client before the transaction about the exchange rate used, as well as about the fee for this service. If the obliged entity fails to provide this information, it will not be entitled to payment for this service.
The Amendment Act also introduces the licensing of operators of independent ATMs providing dynamic conversion services, with the possibility to withdraw such license. The provision of the service through ATMs will be supervised by the Czech National Bank and, in the case of merchants, by the Czech Trade Inspection Authority.
Another change in this area is the introduction of a public sanction for breach of the information obligation when providing the dynamic conversion service, which, according to point 101 of the Amendment Act, is to take the form of a fine of up to CZK 500,000.
The effectiveness of the Amendment Act is set for 1 July 2022.
