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Comment by paol | Hacker News Reader

The money quotes:

"From October, Mastercard said it would increase these fees to 1.5% on every transaction, up from 0.3%. The EU introduced a cap on such fees in 2015 after concerns they pushed prices up for consumers and unfairly burdened companies."

"Mastercard is implementing the rises simply as it's no longer bound by the restrictions imposed by the UK being in the EU."

Thus proving the caps were indeed necessary. If MC was making money with a 0.3% fee the other 1.2% are pure sweet profit margin.

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This Brexit 'deal' just gets worse and worse by the day.

Weren't they supposed to have turned all existing EU law into UK law anyway as a starting point? Maybe phone operators will be next on this train.

I also don't understand how this 'free trade' deal seems to still be costing businesses so much money in customs fees? Isn't the point of a free trade deal that you don't pay customs?

At least Boris Johnson got the Coronavirus pandemic right, oh wait...

The mobile operator 3 have upped their prices on pay as you go. They had a "123" PAYG plan that was 1p/MB 2p/Text and 3p/Min. They now are changing it on Feb 16th to 5p/MB 10p/Text 10p/min. They claim "Some of our international roaming rates are also increasing. This is to keep them in line with domestic standard rates and not a result of brexit"

No, we explicitly rejected a customs union. Customs union would result in no customs (though probably not as you'd have to also be part of the single market to eliminate all checks).

The free trade agreement is different, and a step down from that. Given the amount of trade I think the customs fees will come down significantly over time once things are bedded in a bit more.

it's explicitly not free trade, the entire purpose of leaving the EU was to erect barriers to trade and remove the regulation (good and...bad). "free trade" is just a phrase the Tories like to say because "we're the party of protectionism and crony capitalism" sounds bad even if it is honest...if they cared about trade between the UK and the EU then they wouldn't have left the single market or the customs union, but they prioritised ending free movement above absolutely everything else including the UK economy and UK global competitiveness. and after all this, they *still* didn't manage to make the far right of the Tory party banging on about europe.

they were supposed to transcribe all the EU regulations and law into UK law, but they also granted themselves power to change lots of it via regulation (ie without going to parliament)...it's unclear what specifically happened here.

Other countries prove that as well. You can compare 0.3% to the rates charged in the US and elsewhere.

On the other hand, there are many cash back bonuses.

Which presumably you pay for with those higher rates.

Wasn't britain supposed to inherit all the current EU legislation more or less?

Sure, but that won't stop MC from raising the prices now that the UK no longer has the bargaining power of the EU behind it. What are they going to do, forbid MC from operating in the UK alone? But the threat of all of the EU banning a particular card issuer has some serious teeth in it.

The EU has so much bargaining power that in fact they have the greatest bargaining power of all. Nobody has so much bargaining power like the EU. Before the EU people didn't even know what bargaining power means.

The EU has so much bargaining power that countries like the UAE or Israel could never get hold of more vaccines than the EU -.-

I did a quick search. UAE and Israel have about 9 million population each.

The EU has a population of about 447 million.

Seems like these two countries are 2% of EU in terms of population.

Doesn't change the fact that countries like Israel were able to secure more vaccines relatively to their population (and their GDP) than the EU has so far. Seems like Israel negotiated better than the EU despite the EU constantly self proclaiming to be the best negotiator with the best bargaining power in the world. So far Israel has negotiated and the EU resorts to threatening vaccine nationalism. From the downvotes I can only imply that truth does hurt sometimes.

If I have 5 guests, I can go to a supermarket and buy 5 beers.

If I have 5000 guests, I have to find a beer maker who can make and deliver 5000 beers by a given date. The difference in the challenge is obvious, to any rational observer.

But sure, from far enough, both things can be described as "buying beers for guests".

And more importantly: you can afford to pay twice as much because in absolute terms that's not a huge amount for a relatively rich country as Israel. The EU on a per-capita basis isn't nearly as rich and isn't going to give the medical companies all of their data.

It's about as apples-to-oranges as you can get.

Actually, Israel could not really negotiate because they are quite small and do not produce the vaccine locally, so had no leverage at all.

What happened is what always happens when you really want something but are not in a position to negotiate: You end up paying a lot of money. Israel is said to be paying $47 for the Pfizer vaccine while the US are paying $19.50, and the EU... $14.76. [1]

[1] https://www.timesofisrael.com/israel-said-to-be-paying-avera...

This is the charge Marstercard levies on merchants in the EU, so it has nothing to do with UK legislation, and EU legislation doesn't impose the limit on orders from outside the EU.

Unless UK customers get different pricing to EU ones it wont make a difference. The one receiving the funds (in the EU) is the one that is left worse off. The winner is the UK based bank processing transactions..

Well normally when I do online shopping price is explicitly the sum of base_product_price, shipping_choice, payment_method. So in my experience, a more expensive payment method translates to more expenses to me, the buyer.

Your typical shopify store doesn't charge extra for using Amex or a different card provider (or card country).

It can only be in the shipping cost.

The additional cost is amortized over all customers.

So eu clients will be subsidizing uk clients...

Or merchants will add a little more to their GBP prices.

If you are a European store, and say you receive in EUR and charge in another currency it is highly disadvantageous to you. The payment processor usually charges a fee to convert the currency. Stripe for example charges 2% to convert (which is worse than the 1.5% interchange fee increase, and is is additive to it). You are significantly worse off in this situation.

Also if you are a British consumer simply pay in Euros, and let your card do the conversion for you - you typically get the interbank rate with most modern banks.

Assuming that they have GBP prices. When I purchase from abroad, I very very rarely pay in my local currency. The payment processor or (preferably) my bank performs the currency conversion, on my end of the transaction.

We already get different prices because we use a different currency, so it will just be tucked away in the transaction and currency conversion costs.

I fully suspect us to get different pricing. Until it was banned it was a classic cause of consumer frustration with Ryanair: getting to the payment step, and being charged extra to pay by credit card.

I suspect it'll also force many smaller retailers to stop taking card payments again, and requiring cash.

Ryanair most likely will try to use the new open banking push payment technology. This way the payment can't be reversed and its a faster payment under the hood (cheaper than a debit card for them).

I am really excited about this push technology (example: https://truelayer.com/paydirect)

It seems to me that merchants are paying a ton of money in card fees and waiting 2-3 days for the transaction to settle) whereas actually the transaction could be done for pennies and settle instantly via the UK's very good Faster Payments infrastructure. If this takes off with consumers, Visa and MasterCard are going to see big chunks taken out of their business.

So no protection for the users?

Or take visa? Or any other credit provider? Or a debit card? Heaven forbid that we allow payment providers to compete to provide the best service at the cheapest price.

Visa will probably follow suit.

UK customers are alreay starting to get different pricing from EU ones as e-commerce platforms, and everyone else for that matter, adapt to the new rules (UK VAT at point of sale, customs paperwork, etc).

That being the case this is just a matter of increasing the price even more for UK customers (or EU customers in the UK), should a business decide it makes commercial sense.

The fees are paid by the seller, not the buyer.

So the loser seems to be UK shops.

UK shops will get the normal regime (i.e not 1.5%). It is a UK card payer using an EU shop that this is relevant to.

If you ignore volume, sure

It is unlikely it proves that. Mastercard doesn't have a monopoly on transactions (or if it does, that is the problem). If the profits are extreme other payment processors will step in.

It is more likely there are significant regulatory or other burdens taking UK orders for EU goods.

If Mastercard is doing it, why wouldn't Visa?

Also, I think it's important to remember but most of us don't go and select Mastercard or Visa, most of us don't care. We just use what the banks use. I suspect changing from Mastercard to Visa would be extremely expensive and it's a lot easier and more profitable to just pass along that to the customer.

The customer chooses the card, the retailer pays the fee. Other companies can't undercut Mastercard's fees because the consumer(the person making the decision of payment type here) doesn't know or care what the fee is.

> Other companies can't undercut Mastercard's fees because the consumer(the person making the decision of payment type here) doesn't know or care what the fee is.

You got the consumer part wrong. The consumer is the merchant, which can decide if they allow Mastercard cards or not. Same as many merchants don't accept Amex. It's because they don't like to pay the Amex fee. Same as many merchants don't accept Apple Pay or Android Pay or why some merchants only allow card payments for purchases of a minimum amount.

Merchants are the consumers and they decide what cards they will accept. Based on what cards they will accept consumers will be picky about which cards they want to have. For those exact reasons I have a VISA credit card as well as an AMEX because I sometimes can't use my AMEX, otherwise I wouldn't even have a VISA CC.

Very few merchants have the market power to say no to either Mastercard or Visa. It would prevent to many customers from being able to give them money. Which would then make it pretty tricky for the merchant to make money.

Also Apple Pay and Android Pay don’t cost merchants more to implement or use (assuming they have the HW, which any card reader from the past 10 years will have). The card network rules also forbid merchants from not accepting them, but of course rules don’t mean much without enforcement.

Finally there is really only one company that can undercut Mastercard, and that’s Visa. It’s only a question of time before Visa bump their fees, there’s no way they’re gonna leave money on the table for long.

You have your terminology completely mixed up.

In most of the US, credit card surcharges (charging customers a higher price when using credit cards than when using cash or debit/bank cards) are legal.

Is it also legal to charge customers a fee based on what type of card they use? A large number of customers have multiple cards anyway, so that would be a meaningful incentive.

Yes, many merchants charge customers more when they choose to use AMEX for example.

> Mastercard doesn't have a monopoly

Are we living in the same world? Visa+MC are a duopoly borderlining being a de facto cartel organization and handle the vast majority of all retail transactions in the world.

There is only one other payment processor (at least for cards) and that’s Visa.

The margins are extreme, but so are the barriers to entry. To build a new card network you somehow need to convince a bunch of banks and merchants to support your card network. Good luck with that.

The EU even forced Mastercard to allow others to start a card network running over their infrastructure, after they bought EuroPay. But it’s so hard to get people to actually use a new card network, that no ones actually bothered to try.

> Thus proving the caps were indeed necessary.

Hmm, the cap is necessary if the fees are abusively high and hurt businesses, consumers, and competition, not just because people prefer to pay less.

I don't see how a change from 0.3% to 1.5% proves anything, especially that this is still abiding by the cap set for non-EEA transactions: The UK is no longer in the EEA so they have decided to apply that cap instead of the intra-EEA one, as is their fair and legal right.

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