My understanding too, though merchants sometimes ignore/don't know about it. Step forward Holiday Inn Nice on a prepaid rate and the Tax Free Shop at ZRH - in that case, we insisted on cancellation and correct procedure.

Those were using credit cards. I'm pretty sure (but don't know) that the same should apply for prepaid currency charges.

Perhaps a note to FairFX would clarify?

Probably a separate matter, UK-originating flights already carry a Ryanair surcharge. Prices are in £ using the same number of pounds as Euros on €-area websites, so £10 = €10, and there's currently a 20% or so difference between £ and €.