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. The fees are called “interchange fees.”
Visa also plans to hike the fees on payments made within the U.K. with British credit cards, according to FT.
Visa will charge 1.5 percent of transaction value on online or telephone payments between the U.K. and EU, up from 0.3 percent, and 1.15 percent on debit card payments, up from 0.2 percent, 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.”
According to FT, Mastercard announced similar fee increases in January.
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.
FT quoted a Visa spokesman as having said in response to the October fee plans: “As a network we remain focused on balancing the needs of all participants in the ecosystem who each benefit from the ability to use and accept digital payments. Visa continues to be one of the most cost-effective and secure ways to pay and be paid.”
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