Visa is preparing to increase the fees it charges on behalf of banks on transactions between the United Kingdom and European Union countries beginning in October, the Financial Times (FT) reported, citing unnamed sources. These fees are called “interchange fees.”
Visa also plans to hike the fees on payments made within the UK with British credit cards, according to FT.
Visa will charge 1.5% of transaction value on online or telephone payments between the UK and EU, up from 0.3%, and 1.15% on debit card payments, up from 0.2%, FT reported. The fee increases are possible because England no longer is covered by an EU-wide ceiling on interchange fees that was imposed a half-dozen years ago.
FT quoted Craig Beaumont, head of External Affairs for England’s Federation of Small Business, as having said in response to news of the planned fee increases: “With the move to cashless and eCommerce accelerating, it’s vital that small business and consumer sentiment isn’t stifled by rising card costs, just as we’re trying to bounce back from a severe recession.”
Representatives of Visa and Mastercard have said it is the banks that issue cards, not their banks, that charge interchange fees, FT reported. Visa stated in regulatory filings that charging higher interchange fees is good for business because banks are eager to do business with card companies that glean more revenue for them.
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