Why buying from the EU is about to become more expensive for Visa users
According to Sky News, Visa is set to inform around 4,000 clients of the fee increase this week.
The reports suggest that the fees will increase to around 1.5% for online credit card payments ‒ making them five times higher than the current fees ‒ while for debit cards, interchange fees will jump from 0.2% to 1.15%.
What are interchange fees?
As shoppers, we don’t pay interchange fees directly. Instead they are levied on retailers by their bank when the retailer processes a payment. So for example, when you buy some clothes from an online store, that store will have to pay an interchange fee based on how they go about paying for that purchase.
As a result, while the increase to interchange fees will not immediately impact shoppers, there is a danger that the increased fees will push retailers to increase their prices, particularly for customers based in the UK.
Back in 2015 the interchange fees which banks can charge were capped by the EU. These caps stood at 0.2% of the transaction for debit card payments, and 0.3% for credit card deals.
However, now that the UK has left the EU these safeguards are no longer in place.
Yet another blow
Adam French, consumer rights expert at Which?, described the move as “disappointing”, noting that since the end of the transition period British shoppers have had to come to terms with “a confusing array of new fees and rules and if the increase to interchange fees is passed on to consumers via the price of goods, it will be yet another blow”.
He continued: “The government must be transparent about how new rules and regulations will impact the money in your pocket and work to address gaps in cross-border consumer protections that emerge – in this case, the protection we could lose from the cap on interchange fees that was in place.”
Visa declined to comment on the reports.