Yahoo Finance Visa and Mastercard questioned by MPs over sixfold fee hike
MPs have written to Visa (V) and Mastercard (MA) to demand to know why they have increased fees nearly sixfold when Britons shop with European businesses.
The Treasury 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, rolled out in October, came alongside a jump in credit card fees from 0.3% to 1.5%.
Read more: Travel chaos: Emirates rejects Heathrow’s demand to cut flights
“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 companies have already attracted attention from the Payment Systems Regulator (PSR), which is probing the fees.
The PSR told the Treasury committee last week that the increases in card fees showed the market was "not working well", according to correspondence published by the committee on Thursday.
In a letter to the committee, the PSR warned that while sellers pay the fee, the end result could be higher prices for UK consumers.
The sellers pay the fee, but the end result could be higher prices for UK consumers, the PSR said.
The fees do not apply to UK tourists shopping in a French supermarket, for example.
Read more: Inflation: A quarter of UK firms expecting to raise prices
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.
Watch: Tips To Reduce Your Credit Card Debt
