Mastercard will impose a five-fold increase in fees charged to merchant cash advance in the EU when UK cardholders buy online with them. The new fees, which Mastercard attributes to the UK’s decision to leave the EU, will go into effect on October 15, 2021.
Understandably, the move has raised concerns that retailers could raise prices for UK consumers shopping overseas.
Here is some more information about this developing story.
What are the new Mastercard fees?
Whenever you use your credit or debit card to pay for something, a small percentage of the purchase price is paid by the retailer to the bank that issued the card as an interchange commission. These fees are set by a payment company such as Mastercard.
Currently, Mastercard charges an interchange fee of 0.3% on credit card payments and 0.2% on debit card payments. These will drop to 1.5% and 1.15% respectively.
The new fees apply only to online transactions and will not apply to in-store transactions.
How will the new Mastercard fees affect consumers?
Mastercard said that in practice, consumers should not feel any impact from the changes.
Nevertheless, it is possible that EU retailers decide to pass these costs on to UK buyers, resulting in higher prices for goods and services. This will be in addition to fees already imposed due to Brexit bureaucracy (including tariffs, VAT and handling fees).
The BBC says the new Mastercard changes come at a time when retailers increasingly face additional red tape and checks and potentially higher costs for goods entering the UK.
And all of this is in addition to the Covid-19 restrictions which have already presented many other challenges for businesses.
Industries such as hotels, airlines, travel groups and car rentals have been hit hard by the pandemic. Companies in these industries may be forced to pass additional Mastercard fees on to consumers.
That being said, nothing is confirmed yet.
The new charges will not come into effect until later this year. So there is still time for EU businesses to look for ways to reclassify UK sales to avoid fees.
But we’ll have to wait and see.
Visa, Mastercard’s main rival, has not announced plans to adjust its rates. At the same time, he did not rule out such a move.
He released a statement saying that if it introduced new interchange fees, the company would provide its customers with at least six months’ notice to help them plan ahead.
Save money with the right credit card
While we hope the Mastercard changes don’t cause consumer prices to rise, it’s always good to be prepared. It means finding ways to cut costs and save money when spending on foreign websites.
Many buyers are unaware that paying for purchases by card on a foreign website and in foreign currencies entails additional costs (up to 3%).
The good news is that specialty credit cards, such as travel credit cards, don’t charge these additional fees. This makes them more than ideal for shopping on foreign websites, or even for use while traveling or vacationing abroad.
So if you regularly use your credit card to order items from overseas, or if you travel overseas a lot, a travel credit card could save you a lot of money on transaction fees at home. abroad.
To find the one that best suits your needs, take a look at our pick of the best travel credit cards.
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