Credit card companies Mastercard and Visa, could face a cap on fees they charge retailers for payments between the United Kingdom and the European Union. This news was put forth by the UK’s Payment Systems Regulator, which stated that these charges cost UK companies between £150m and £200m in the previous year. Furthermore, since Brexit, the firms may have set the fees at an unnecessarily high level, the regulator added.
However, Visa disagreed with the findings, mentioning that a cap was not justified. Till the UK was a part of the European trading bloc, the cap on “cross-border interchange fees” applied to the UK as well. Since the exit, Mastercard and Visa have “significantly raised” the charges they impose on British traders, the watchdog found.
The regulator also said that larger British firms could handle these extra fees but smaller companies might pass the costs on to their EU and UK consumers. The watchdog has recommended an introductory, threshold-focused cap of 0.2% for debit card deals and 0.3% for credit cards, for online transactions made by the UK corporations. The suggested cap is consistent with the EU’s limits.
Mastercard justified the fees and claimed that these offered value in a competitive market. Visa argued that the fees were only applied to less than 2% of UK card payments, which were made by those based in the European Economic Area and buying online from a UK seller and carrying a higher risk of fraud.
The PSR has called for comments on the proposals before the end of next month, and its final report is expected to be published during the first quarter of 2024. Recently, the UK commissioned a study that recommended a “digital alternative” for its economy, which might pose a challenge to reliance on US payment giants, echoing the desires of the EU for a local alternative
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