The payments giant Visa is to hike fees for purchases made by UK-based customers from most of Europe – stoking fears of higher prices and fuelling the argument that Brexit is adding to the cost of trading with the EU.
Sky News has learnt that Visa plans to inform its roughly 4000 clients later this week that so-called interchange fees will increase to 1.5% for online credit card payments – a fivefold increase.
For debit card transactions, the rate will go up from 0.2% to 1.15%.
The move will particularly affect online transactions with EU-based companies in sectors such as online retail, hospitality and travel.
Interchange payments are levied on behalf of banks each time a payment is made, with the money then passed on to the card-issuing bank.
Visa, which is understood to have notified regulators about its plans, is the biggest issuer of debit cards in the UK.
The move to increase interchange fees will bring it into line with MasterCard, its rival payments group, which announced a similar move in January.
MasterCard’s increase will take effect in October.
The two companies are able to raise the levy they charge because of Britain’s exit from the EU, which regulates the fees within the trading bloc.
In 2019, the European Commission accepted commitments from Visa and MasterCard for a standardised fee structure for international consumer transactions at merchants within the European Economic Area.
Both Visa and MasterCard have faced a deluge of litigation in recent years over the charges they impose, with retailers and consumers pursuing billions of pounds in legal claims.
People close to the situation said that Visa Europe was likely to give its clients, which include many of Britain’s biggest banks, six months to implement the higher fees.
They added that Visa would not profit from the increase, and that the hike would apply only to online purchases made from the UK to EU countries.
Nevertheless, the move will stoke fears of higher consumer prices if merchants choose to pass on the fee increases to their own customers.
A Visa spokesman declined to comment.
(c) Sky News 2021: Visa to hike interchange fees for UK customers in post-Brexit move