Yahoo Finance MPs demand answers from Visa and Mastercard over post-Brexit card fees hike
MPs have written to Visa and Mastercard to demand to know why they have increased fees nearly sixfold when Brits shop with European businesses.
The Treasury Select Committee said fees have risen from 0.2% to 1.15% when a UK customer uses their Visa or Mastercard debit card to buy something from Europe.
So far, the companies have not explained the reason for the hike, the payments watchdog and MPs said.
The rise, in October, came alongside a jump in credit card fees from 0.3% to 1.5%, the MPs said.
The companies have already attracted attention from the Payment Systems Regulator (PSR), which is probing the fees.
Recent rises in the fees paid by firms for cross-border debit and credit card transactions add additional costs to businesses, many of whom are already grappling with rising inflation and other cost pressures
Committee chairman Mel Stride
In a letter to the committee, the PSR expressed concern the market is “not working well”, with the fee spikes a symptom.
The sellers pay the fee, but the end result could be higher prices for UK consumers, the PSR said.
“Recent rises in the fees paid by firms for cross-border debit and credit card transactions add additional costs to businesses, many of whom are already grappling with rising inflation and other cost pressures,” said committee chairman Mel Stride.
“That’s why we have today written to Visa and Mastercard to request an explanation for these fee increases.”
The fees do not apply to UK tourists shopping in a French supermarket, for example.
They are instead charged if someone in London shops online or over the phone with their UK card to get a delivery from a Paris-based business.
The same goes for European shoppers buying from British businesses. The fees apply to the European Economic Area (EEA), not just the European Union (EU).
Before Brexit, the companies were tied by EU laws capping the amount they could charge.
That changed when the UK left the bloc.
“The committee is aware that the EU Interchange Fee Regulation and the UK Interchange Fee Regulation which cap consumer debit and credit cards at 0.2% and 0.3% respectively no longer apply to cross-border interchange fees,” Mr Stride said in a letter to both firms.
“However, the Payment Systems Regulator has informed us that it has not seen ‘evidence that shows that there have been significant changes in the costs for issuers of enabling online transactions via EEA-issued cards in the UK, or UK-issued cards in the EEA,'” the letter read.
“I would therefore be grateful if you could write to us with the underlying reasons behind your increase in cross-border interchange fees.”
