Credit card giant Mastercard is to raise the fees it charges merchants when UK cardholders buy goods and services from the EU by fivefold.
It has sparked fears that consumer prices could rise if merchants choose to pass on those costs, especially on items not available from UK retailers.
Transactions with airlines, hotels, car rentals and holiday firms based in the EU could all be affected.
Mastercard attributed the move to the UK’s decision to leave the EU. It added that “in practice” UK consumers would not be affected by the move.
The change affects the “interchange” fee that banks charge businesses to use their payment networks.
From October, Mastercard said it would increase those fees to 1.5% on every transaction, up from 0.3%.
The EU introduced a cap on such fees in 2015 after concerns they pushed prices up for consumers and unfairly burdened companies with hidden costs.ut Mastercard said that since the end of the Brexit transition period, the cap no longer applied to many payments between the UK and European Economic Area (which also includes Iceland, Liechtenstein and Norway) and so it was changing its policy.
It said this was in line with a deal it made with the EU on fees for purchases from outside the EEA.
“As a result of the UK leaving the EEA, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European Commission in 2019 for non-EEA card transactions,” the company said.
“In practice, only EEA merchants making e-commerce sales to UK cardholders will see a change.”
Kevin Hollinrake, chair of the parliamentary group on Fair Business Banking, told the Financial Times, which first reported the story, that the move “smacks of opportunism”.
And Callum Godwin, chief economist at CMSPI, the global payments consultancy, said airlines, hotels, car rentals and travel groups would be hit.
“[This will happen] anywhere the consumer is in the UK and the merchant is in the EU,” he said.
He added that many firms in these industries were already struggling due to the pandemic. Companies in the UK and EU are already facing added costs and delays due to post-Brexit trade rules brought in on 1 January.
Some EU exporters have already stopped deliveries to the UK because of new VAT related charges.
Meanwhile, UK consumers who have bought goods from firms based in the bloc have found themselves facing hefty charges to cover customs duties, taxes and administrative costspaperwork.
Source: bbc.com
