Mastercard’s confirmation that it will increase credit card transactional fees of UK consumers on EU purchases has been marked as the latest business conflict of Brexit.
From October 2021, Mastercard confirmed to EU businesses that it would increase its charges on UK credit transactions from 0.3% to a maximum of 1.5%.
In its statement, Mastercard reiterated that it would not keep any of the transactional charges, with the benefits being passed to its bank and credit card providers.
Since 2015, EU member states have capped all credit card interfee charges at a rate of 0.3% across the European Economic Area – a ruling that the British Retail Consutium judged to have saved UK businesses £500 million a year on credit purchase fees.
Mastercard announcement was met with widespread speculation as to how interfee charges would be disbursed across the consumer value chain and at what cost for the UK businesses no longer in the EEA.
Nonetheless, the new fees have been implemented to solely make money from merchants, according to Anton Komukhin, Head of Product, at Unlimint, the specialists in cross border payments.
Commented on the news, he added: “The increase in fees announced by Mastercard for UK purchases from the EU will definitely be a challenge for businesses on both sides (both EU and UK) and such a significant increase in price will undoubtedly impact trade with the UK. It’s obvious that such a reaction is not aimed at maintaining cross-border turnover or trade – and looks only like an attempt to make more money from merchants in an already challenging environment due to Brexit and the pandemic.
“Despite the hard Brexit, I am sure businesses remain interested in maintaining favourable trade relations between the EU and the UK. This move from Mastercard to increase fees could start a very concerning trend towards widespread cost increases in cross-border transactions.”
Unlimint are experts in global cross-border payments providing marketplaces and sellers with a simple business interface that enables payments to flow freely and invisibly.
The banking giant cited the UK’s departure from the EU as the reason the rise had to be implemented, stating: “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.
Currently, the cap is at 0.3 per cent for credit cards and 0.2 per cent for debit cards, however, with the impending regulations this figure will rise to 1.5 per cent for credit card transactions and 1.15 per cent for debit cards.