Five-fold increase in card fees expected when buying from EU

Consumers could face higher costs when buying from the EU, experts warned following reports Visa will increase its fees. Sky News reported that the payments firm, the biggest issuer of debit cards in the UK, will inform its clients this week of the changes, months after rival Mastercard did the same. The interchange fee is paid by merchants to banks when a customer makes a transaction. If confirmed, the higher fees would apply to purchases made online in the UK from companies based in the EU. Although the increased costs will be borne by businesses, the move will fuel fears that consumers could face higher prices in the future. James Daley, of consumer group Fairer Finance, said: “It could absolutely be passed on to consumers one way or another. If you are buying things online and the people you are buying from now have an increase in their costs, they aren’t just going to absorb that. “Online retailers are generally trading on pretty thin margins and they are going to have to pass those costs on.” The fees would increase five-fold for credit card transactions, to 1.5 per cent, and from 0.2 per cent to 1.15 per cent for debit cards.  Rules from Europe introduced in 2015 cap the so-called interchange fees banks charge retailers when shoppers pay by debit or credit card. It is understood that following Britain’s exit from the EU, the firms can now hike their fees in what will be seen as a boost for British banks. Visa declined to comment on the Sky News report, but the broadcaster said that “people close to the situation” said clients would be given six months to implement the higher fees.  They also stressed that Visa itself would not profit from the increase which applied only to online purchases made from the UK to EU countries. The new Mastercard fees are expected to come into force in October. Social media users were critical of the development with a town councillor from Penrith saying he “must have missed the bus with this on the side”, referring to the infamous Vote Leave battle bus.

Five-fold increase in card fees expected when buying from EU

Consumers could face higher costs when buying from the EU, experts warned following reports Visa will increase its fees.

Sky News reported that the payments firm, the biggest issuer of debit cards in the UK, will inform its clients this week of the changes, months after rival Mastercard did the same.

The interchange fee is paid by merchants to banks when a customer makes a transaction. If confirmed, the higher fees would apply to purchases made online in the UK from companies based in the EU.

Although the increased costs will be borne by businesses, the move will fuel fears that consumers could face higher prices in the future.

James Daley, of consumer group Fairer Finance, said: “It could absolutely be passed on to consumers one way or another. If you are buying things online and the people you are buying from now have an increase in their costs, they aren’t just going to absorb that.

“Online retailers are generally trading on pretty thin margins and they are going to have to pass those costs on.”

The fees would increase five-fold for credit card transactions, to 1.5 per cent, and from 0.2 per cent to 1.15 per cent for debit cards. 

Rules from Europe introduced in 2015 cap the so-called interchange fees banks charge retailers when shoppers pay by debit or credit card. It is understood that following Britain’s exit from the EU, the firms can now hike their fees in what will be seen as a boost for British banks.

Visa declined to comment on the Sky News report, but the broadcaster said that “people close to the situation” said clients would be given six months to implement the higher fees. 

They also stressed that Visa itself would not profit from the increase which applied only to online purchases made from the UK to EU countries.

The new Mastercard fees are expected to come into force in October.

Social media users were critical of the development with a town councillor from Penrith saying he “must have missed the bus with this on the side”, referring to the infamous Vote Leave battle bus.