MasterCard to increase fees for UK purchases from EU | Hacker News Reader

MasterCard to increase fees for UK purchases from EU

ft.com

33 pointsxworld2125 comments

The EU introduced a cap on such fees in 2015 after concerns they pushed prices up for consumers and unfairly burdened companies with hidden costs.

While this price increase is 'opportunism' on MasterCard's part, I've seen people argue this isn't a consequence of Brexit, even though ultimately it is. British consumers are no longer protected by the rather "feisty" pro-consumer EU courts and are now at the mercy of the rather less consumer friendly UK courts, so companies like MasterCard will be tempted to "have a go."

One possible consequence of this, especially if Visa decides to join in, is that some companies that are based in the EU for payments (such as Amazon) will open up UK subsidiaries which may actually have a benefit for the UK. Or they might just put their prices up a bit. We'll see..

I have also added this to http://brexitreality.org/ - a spreadsheet of post-Brexit "how it's going" stories which you might find useful or wish to contribute to.

Payments between the UK and the EU will become more expensive and however we look at it this will be bad for both UK consumers and UK businesses.

For example, in the UK Stripe charges one fee for European cards and another fee for non-European cards. I suppose this reflects the underlying costs. Because of this move by Mastercard I can see Stripe and others change this soonish with the lower fee applying only to UK cards (for customers based in the UK). And then we'll also have to see if the government keeps the cap for domestic transactions or decide to "cut red tape" and remove all restrictions.

Just on the "how it's going" stories - and thanks for this - I wonder if there is scope for a co-ordinated effort to track the impact as there are a few people doing similar things. I'd certainly be happy to donate some time.

I was shocked to hear that the UK government hasn't even got a department / individual with responsibility for monitoring and managing the EU trading relationship - not even the so called 'Department for International Trade'.

They do have an individual... It's just such a politically hot topic whoever is in that seat keeps resigning...

Who is that now then?

The story is a little bit confusing.

Leaving the EEA, the interchange paid to debit and credit card* issuers is indeed not capped to respectively 0.2 and 0.3% anymore. Banks can decide to charge more, but that is not different from say, purchases with Swiss or US credit cards that happen in the EU. Merchants and payment processors have to deal with that. Whether they can pass on the fee to specific consumers, I believe that depends on countries and competition laws. The issue here is that the EU prohibits card payment surcharges, which makes MC and VISA very happy.

But back to the initial topic, what's MasterCard's real involvement in pushing for interchange increase? Their own fee isn't concerned by this cap anyway. And from what I understand, it's very small compared to the part going to payment processors. Why would they initiate the move? I'm sure banks are very well aware of regulations going away and opportunities to charge more fees.

* Only 4-party schemes, non-business/corporate cards.

In practice, I wonder how many companies will pass this 1.2% fee just onto their UK customers versus how many will just eat it (or I guess distribute it among all their customers). In America, our credit card fees are typically double what even the UK is paying now, but almost nowhere passes that just onto card users. It's not worth the hassle and potential outrage.

Several EU businesses have stopped selling to UK customers in the face of incomprehensible customs, duties, and delivery charges.

Those EU businesses that continue to sell to the UK will presumably already be working out an uplift to UK customer prices anyway - being denominated in a different currency makes this easy enough to do (it's impossible to identify consumer surcharges if you just list the prices in a different currency).

And as a customer I've already stopped buying from the UK because of unclear or high customs.

As a British customer in the EU... same.

The end result is bad, both ways.

This is behind the FT paywall for me, so here is a link to the BBC's article, https://www.bbc.com/news/business-55796426.

Taste the sovereignty!

This deal is getting worse all the time.

Seems like an easy fix, obviously MasterCard are showing they are not to be trusted and therefore require regulation. I think they played themselves.

> "As a result of the UK leaving the EEA, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European Commission in 2019 for non-EEA card transactions," the company said.

They are regulated, they're just allowed to charge more for EEA to non-EEA than they are EEA to EEA.

Right, but the UK is empowered to apply its own regulation.

Surely the UK can only regulate Mastercard's fees to businesses within the UK? I guess they could ban UK consumers from buying from stores outside the UK that use Mastercard, maybe? Other than threatening to do that, how can they regulate what Mastercard charge businesses outside the UK?

So in the end UK lost even more control, the farce continues

Last time I checked, 0.3% is much better than 0%.

Also it's not as if there aren't alternative payment processors.

I agree, Mastercard would rather have 0.3% fees on UK purchases from EU businesses than have the UK government enact such a ban. I just don't think the UK government would do that though. It'd be really hard to police too, do users even know the internal payment processor used by a store? It's probably labelled for marketing/trust but I doubt there's that much notice paid to it.

Regulation by who?

Since the UK is now isolated (and has spent its goodwill in the EU), MasterCard may reasonably believe they have power enough to do this.

Will the UK government regulate this? A government which is scarcely managing its current responsibilities.

> MasterCard may reasonably believe they have power enough

> to do this.

The UK is still a large economy and there are quite a few other big players in the transactions handlers market. Given how several large companies are looking to setup micro-transactions with zero-cost transaction overheads, they might be shooting themselves in the foot.

The reason the UK should fight this is that they obviously currently have a lot of outgoings and very little income (like every Country during COVID). They will already have to raise taxes - if MasterCard are also raising their own form of tax this will even more greatly increase living costs.

> A government which is scarcely managing its current

> responsibilities.

I don't want to get into politics on HN.

> I don't want to get into politics on HN.

Your original suggestion of regulation is politics. It's a political decision. When you say "the UK should fight this", you mean: "UK politicians should actively decide to act".

MasterCard making this move forces the UK government to show their hand - and it's not that MasterCard has made this decision without that in mind. It indicates that MasterCard thinks* there's a good chance UK government won't do anything.

(*or knows - they spend plenty on lobbying and will have spoken directly to decision-makers)

Regulated by who? UK govt should regulate what Mastercard charges in Europe? Or European govt should regulate what they charge customers outside their region?

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