Meginmál

Payment services

Payment services

  • Payment service is intended to ensure that electronic payments run smoothly.
  • Payment service provides consumers with the opportunity to take advantage of innovations in financial services offered by both banks with the required operating licences and other regulated payment service providers.
  • Payment service enables individuals and businesses to better monitor their finances and do business online without a payment card.
  • If a problem arises, the relevant party's commercial bank or other payment service provider shall respond to complaints within fifteen working days.
  • It is possible to pay for goods and services within the EEA as easily and securely as within one's home country.
  • It is not permitted to impose additional charges for transactions within the EEA when paying with a payment card issued by a licensed institution within EEA.
  • The rules cover all types of electronic payments (e.g. transfers and payments by debit and credit card).
  • The consumer has a right to information about all charges, in relation to all payments. Whether the payment is in store or online, the seller cannot charge a consumer more than the advertised price (i.e. impose additional fees) when paying with a debit or credit card.
  • Under certain circumstances (i.e. for certain cards) a seller may apply an additional fee. The fee must reflect their actual costs for this payment method. If consumers consider that they have paid too much or that the additional payment does not correspond to the actual cost, for example, when they have booked a flight or paid for a hotel reservation, they can examine their rights further on the European Union website.
  • With the implementation of the Act on Payment Services, electronic payments became more secure thanks to Strong Customer Authentication. This is ensured by combining different authentication data, such as a PIN and fingerprints.
  • The consumer's liability in connection with an unauthorised payment if, for example, his/her credit card is stolen, is limited to a maximum equivalent of 50 euros in Icelandic króna (except in cases of gross negligence).
  • In cases when the amount of a payment is unknown beforehand (such as for car rental and hotel costs), the seller can only freeze the agreed amount on the consumer's card with his/her consent.
  • If a consumer has authorised a direct debit to a certain seller, the consumer has eight weeks to object to incorrect charges. The consumer must be reimbursed within ten working days if the charges turn out to be incorrect.
  • More information about your rights and consumer protection within the EEA.

Foreign Transaction Fee

  • A Foreign Transaction fee is a charge added to the exchange rate by card companies (e.g., VISA and MasterCard) when they sell foreign currency to card issuers (e.g., banks) for consumer transactions in foreign currencies. The fee varies by card issuer and currency type, typically ranging from 2-3%, which is added to the price of the product or service. This applies to both foreign card usage and online purchases in foreign currencies.
  • To calculate the Foreign Transaction fee, the exchange rate at which card companies sell foreign currency to card issuers is used as the basis. Here’s a simple example:
    • A transaction occurs abroad. The purchase price of a product is €100. The product is paid for with a credit card where the card issuer's fee is 3% on top of the exchange rate provided by the card company. The exchange rate offered by the card company to the card issuer is 150 ISK per Euro spent by the consumer. Given the 3% fee, the consumer pays 154.5 ISK per Euro (1.03 * 150 ISK). Therefore, the total purchase price of the product is 15,450 ISK.
  • According to Act No. 114/2021 on payment services, several rules pertain to the provision of information regarding Foreign Transaction fees and other similar charges. Article 54, paragraph 1, item 3 of the Act states that information must be provided on all fees that the payment service user must pay concerning charges and exchange rates.
  • Consumers should be informed about the fees and/or charges they pay for transactions in foreign currencies, if applicable. The information should be accessible on paper or another durable medium, as per Article 53 of the Act. Consumers should be able to find information regarding Foreign Transaction fees and other related charges in the terms and conditions of card issuers, which should be clear and understandable, and also in Icelandic or another agreed language.
  • Consumers can request information and terms regarding the Foreign Transaction fee at any time during the contractual relationship with card issuers. This is stated in Article 55 of the same Act.
  • When consumers are abroad and pay for goods or services with a card, they are usually offered two options: to pay in their own currency (ISK) or in the currency of the country they are in. The cost can vary depending on which option is chosen.
  • Generally, it is more expensive in such situations to pay in one's own currency because it involves a service where the amount is fixed, i.e., it is not subject to exchange rate fluctuations. Since it is a service, an additional fee is usually added to the payment. On the other hand, such a service increases consumer predictability, and some consumers may prefer to get information about the amount they pay in their own currency rather than in a foreign currency.
  • It is good to keep in mind that if consumers pay for goods or services in their own currency, it is possible that the Foreign Transaction fee and the service fee for Foreign Transaction are not itemized. This makes it unclear how much is attributed to the Foreign Transaction fee and how much to the service fee.