SHOPPERS may have to pay extra when buying goods from the European Union after Mastercard hikes fees.
The payments network company will increase fees up to five times what they are now, sparking fear among MPs that they could be pushed onto consumers, reports the Financial Times.
Mastercard and Visa charge merchants a fee on behalf of banks every time a credit or debit card payment uses their network.
The EU introduced a cap in 2015 to stop firms being landed with hidden fees worth hundreds of millions of euros and higher costs for shoppers.
But Mastercard has told companies the limit no longer applies to payments made between the UK and the EU since January 1, when the UK left the bloc.
From October 15, Mastercard will slap a charge worth 1.5% of the transaction value on every online credit card payment from the UK to the EU, up 0.3% on what the network charges now.
For debit card payments, the fees will go up from 0.2% to 1.15% of the transaction value.
On a credit card payment worth £100, the fee will rise from £1.20 to £1.50, while for debit cards it will rise from 20p to £1.15.
As the charges are on behalf of banks and card issuers, Mastercard won’t directly benefit from the increase.
The worry is, these charges will be reflected in the price shoppers pay at the till, pushing up prices as a result.
“Some people might put this change down on Brexit, but it’s really just greed,” Joel Gladwin, policy director at the Digital Economy Alliance, which represents UK startups, told exbulletin.com.
“Making life easier for traders and maintaining their pre-2021 status fits well with the power of the card system.
“This not only hurts the bottom line of e-commerce startups and subscriptions, which are already under pressure, but also happens at a time when numerous small businesses have switched to online models to survive.”
The fee rise will also affect services provided by companies with EU- based operations, such as airlines, hotels, car rentals and travel groups.
Callum Godwin, chief economist at CMSPI, said firms who have already been hit badly by the coronavirus crisis are likely to pass on the increased fees to customers as they can’t afford to take the losses.
Mastercard rival, Visa, has not yet announced plans for similar fee hikes.
Mastercard told the FT that the move will bring interchange rates in line with levels it has agreed to in 2019 with the European Commission for transactions from all non-EU areas.
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The Sun has contacted Mastercard for comment.
Millions of Brits could be in line for a £300 payout after a landmark lawsuit against Mastercard on behalf of consumers was given the go ahead.
A judgement by the Supreme Court in December means a £14billion lawsuit against the card company, which alleges people were overcharged for years, can proceed.