Financial services company Mastercard will increase its transaction fees by fivefold for British cardholders when they purchase goods and services from companies based in the European Union.
Mastercard said it would increase fees for credit card payments from 0.3% to 1.5% of the value of the purchase while debit card payments will increase from 0.2% to 1.5% starting on Oct. 15.
According to Mastercard, payments between the United Kingdom and the European Economic Area (EEA) are now considered “inter-regional,” following Brexit.
“As a result of the U.K. leaving the European Economic Area, Mastercard will adapt interchange rates on U.K. cards to the commitments it gave the European Commission in 2019 for non-EEA card transactions,” Mastercard stated.
“In practice, only EEA merchants making e-commerce sales to U.K. cardholders will see a change. Interchange is not a consumer-facing cost but the fees paid between merchants and banks for the provision of payments. Consumers should not feel any impact of changes in interchange fees,” the company further stated.
The fee increase could also affect payments for car rentals, travel groups, and airlines based in the EU, according to Chief Economist Callum Godwin of the global payments consultancy CMSPI, as reported by BBC News.
All Party Parliamentary Group on Fair Business Banking Chair Kevin Hollinrake described the fee increase as “alarming” and said that it “smacks of opportunism.”
“I would urge the regulators to step in as a matter of urgency to ensure that financial institutions do not use Brexit as an opportunity to hike up costs that consumers will ultimately bear,” Hollinrake told international business newspaper Financial Times.
“Some people might put this change down to Brexit, but it is actually just greed,” Policy Head Joel Gladwin of the Coalition for a Digital Economy told Financial Times.
© Fourth Estate® — All Rights Reserved.
This material may not be published, broadcast, rewritten or redistributed.