Small Business Brexit – VISA Hike The Interchange Fees for UK Customers

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Small Business Brexit - Visa to hike interchange fees for UK customers YBKBS Small Business News for Smart Business Owners
Small Business Brexit - Visa to hike interchange fees for UK customers

Small Business may well be dealt a tougher hand in Post-Brexit Britain as VISA are set to notify an INCREASE in interchange fees for doing business in Europe. 

The payments giant is to hike fees for purchases made by UK-based customers from most of Europe – prompting more fears of higher prices and fuelling the argument that Brexit is adding to the cost of trading with the EU.

Marc Ford

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.
Waiting To Hear

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.

MasterCard Have Made a Similar Move Starting in October YBKBS Small Business News for Smart Business Owners
MasterCard Have Made a Similar Move Starting in October
Well “They Went First…”

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.

Backdoor Behaviour

It’s nearly a year since Prime Minister Boris Johnson told us all to close the doors, lock up your frail, vulnerable and children as the CoVid19 Pandemic took a grip of the UK. In many cases those same doors have remained shut for most of the year on the High Street or for many small businesses. 

The increase in fees will effect small businesses doing business in Europe YBKBS Small Business News for Smart Business Owners
The increase in fees will effect small businesses doing business in Europe

It seems odd behaviour for a company that could only have seen a benefit of people doing business online with Debit and Credit Cards  as cash use has plummeted during the last twelve months. For some it seems very much a ‘backdoor’ way of making more money out of businesses, the self employed and freelancers that are already under huge financial pressures thanks to a Global Pandemic, let alone a Post-Brexit Britain that wants to do business abroad.

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.