The fees that companies of the European Union pays to Mastercard against payments from online shoppers from the United Kingdom will be increased by at least 400 per cent which would mean that the ultimate price for consumers of European companies would increase significantly.
A percentage of the selling price of a product that is purchased using a credit or debit card is paid by the retailer to the bank that had issued the cards in the form of an interchange fee - the rate of which is set by a payments firm.
Currently, the interchange fee charged by Mastercard is 0.3 per cent and 0,2 per cent for debit cards for credit card payments and debit card payments respectively. Companies in the EU have now been told by it that the fees will be increased to 1.5 per cent and 1.15 per cent for credit and debit card payments respectively starting October 15.
This increase in fees would be beneficial for banks and card providers and not Mastercard, said a report published by The Financial Times.
The EU has set an upper cap for these fees across the European Economic Area (EEA), including within the UK since 2015.
Currently the charges of Mastercard are in line with the EU cap. The new gees in turn are in line to meet a cap for non-EEA cards used for online purchases within the area and includes the countries of Iceland, Liechtenstein and Norway as well as EU countries.
The new fees will be applicable for online sales with shops and businesses based in the EEA that are made using cards issued from the UK. For face to face sale however there haqs been no increase in rates.
“As a result of the UK leaving the European Economic Area, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European commission in 2019 for non-EEA card transactions,” Mastercard said in a statement.
“In practice, only EEA merchants making e-commerce sales to UK 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,” Mastercard added.
It is likely that the higher fees will be passed on to consumers through higher prices, say concerned consumer organisations and groups.
“Consumers are already facing significant inconvenience and extra costs when shopping with businesses based in the EU and Mastercard’s decision to reimpose these hefty charges will come as another blow,” said Adam French, a consumer rights expert at Which?
“The success of Brexit will be judged by how it affects our everyday lives, so the government must not neglect these consumer issues. Ministers must do a better job of explaining a confusing array of new rules and regulations and the government needs to work with the EU with a view to removing these costs as part of future negotiations,” French added.
No increase in such fees gas so far not been announced by Mastercard’s rival Visa,
(Ssource:www.thegaurdian.com)
A percentage of the selling price of a product that is purchased using a credit or debit card is paid by the retailer to the bank that had issued the cards in the form of an interchange fee - the rate of which is set by a payments firm.
Currently, the interchange fee charged by Mastercard is 0.3 per cent and 0,2 per cent for debit cards for credit card payments and debit card payments respectively. Companies in the EU have now been told by it that the fees will be increased to 1.5 per cent and 1.15 per cent for credit and debit card payments respectively starting October 15.
This increase in fees would be beneficial for banks and card providers and not Mastercard, said a report published by The Financial Times.
The EU has set an upper cap for these fees across the European Economic Area (EEA), including within the UK since 2015.
Currently the charges of Mastercard are in line with the EU cap. The new gees in turn are in line to meet a cap for non-EEA cards used for online purchases within the area and includes the countries of Iceland, Liechtenstein and Norway as well as EU countries.
The new fees will be applicable for online sales with shops and businesses based in the EEA that are made using cards issued from the UK. For face to face sale however there haqs been no increase in rates.
“As a result of the UK leaving the European Economic Area, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European commission in 2019 for non-EEA card transactions,” Mastercard said in a statement.
“In practice, only EEA merchants making e-commerce sales to UK 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,” Mastercard added.
It is likely that the higher fees will be passed on to consumers through higher prices, say concerned consumer organisations and groups.
“Consumers are already facing significant inconvenience and extra costs when shopping with businesses based in the EU and Mastercard’s decision to reimpose these hefty charges will come as another blow,” said Adam French, a consumer rights expert at Which?
“The success of Brexit will be judged by how it affects our everyday lives, so the government must not neglect these consumer issues. Ministers must do a better job of explaining a confusing array of new rules and regulations and the government needs to work with the EU with a view to removing these costs as part of future negotiations,” French added.
No increase in such fees gas so far not been announced by Mastercard’s rival Visa,
(Ssource:www.thegaurdian.com)
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