Visa is to increase its interchange fees on cross-border transactions between the UK and the EU later this year, according to a report by The Financial Times (FT).

People briefed on the plans told the newspaper that Visa will hike fees in October, when it will also raise scheme fees on UK-EU transactions, and increase charges for domestic payments using British company credit cards.

Prior to the UK’s exit from the EU, consumers benefitted from an interchange fee cap for credit cards of 0.3 per cent, and 0.2 per cent for debit cards. From October, this will jump to 1.5 per cent and 1.15 per cent respectively.

In January, rival payments giant Mastercard, revealed similar plans for its interchange fees post-Brexit. The company will also be charging fees five times the current caps on credit and debit cards. [link to article]

The move has raised concerns about the impact on small businesses and the UK’s economic recovery from the pandemic.

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, told The FT: “With the move to cashless and e-commerce 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.”

Peter Keenan, chief executive at Apexx Global, the payments service provider for companies including Asos, told the newspaper that it had already seen a jump in inquires from businesses exploring the option of creating new EU or British entities to avoid the hike in fees.

But he said that this would be too complicated for smaller companies.

“The small guys just don’t have the resources to set up say a French entity or German entity,” Keenan told the FT.

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