Warning to Mastercard and Visa customers over new EU fees
Millions of Mastercard and Visa users are being warned over extra charges when shopping on EU websites.
The firms have increased so-called interchange fees for online credit and debit cards for UK to EU transactions.
Cross-border fees have gone up from 0.2% to 1.15% for debit cards and 0.3% to 1.5% for credit card transactions.
It means that for a credit card payment worth £100, the fee would rise from £1.20 to £1.50, and for debit cards it would increase from 20p to £1.15.
The companies have already attracted attention from the Payment Systems Regulator (PSR), which is probing the fees.
The fees are charged to retailers but the end result could be higher prices for UK consumers, the PSR said.
Before Brexit, the companies were tied by EU laws which capped the amount they could charge, but this changed when the UK left the bloc.
Fee hike probed by MPs
Mastercard and Visa have not yet explained the reason for the hike, but MPs have now written to the firms to demand to know why fees have increased almost sixfold.
The Treasury Select Committee addressed the issue on Thursday (14 July). Committee chairman Mel Stride, said: “Recent rises in the fees paid by firms for cross-border debit and credit card transactions add additional costs to businesses, many of whom are already grappling with rising inflation and other cost pressures.
“That’s why we have today written to Visa and Mastercard to request an explanation for these fee increases.”
In a letter to the firms, Ms Stride wrote: “The committee is aware that the EU Interchange Fee Regulation and the UK Interchange Fee Regulation which cap consumer debit and credit cards at 0.2% and 0.3% respectively no longer apply to cross-border interchange fees.
“However, the Payment Systems Regulator has informed us that it has not seen evidence that shows that there have been significant changes in the costs for issuers of enabling online transactions via EEA-issued cards in the UK, or UK-issued cards in the EEA.”
The letter added: “I would therefore be grateful if you could write to us with the underlying reasons behind your increase in cross-border interchange fees.”