Visa and Mastercard blamed fraud and rising competitors for the spike in charges between the UK and the EU after Brexit because the fee firms face plenty of probes into the functioning of the cardboard market.
The two teams — which represented 99 per cent of card funds within the UK final yr — laid out their arguments in letters written to a UK Treasury committee analyzing the rise in card charges and printed on Wednesday.
In their letters, each networks cited the upper ranges of fraud in cross-border transactions as a major trigger for the rise in prices.
Kelly Devine, Mastercard’s UK and Ireland president, additionally blamed stress from rivals within the fee area, together with from China’s Union Pay.
“To remain competitive and continue to offer benefits of electronic payments to consumers, Mastercard must be able to attract issuing and acquiring banks to the scheme,” she wrote.
Mel Stride MP, chair of the committee, wrote in a press release on Wednesday: “All businesses, particularly small and medium-sized firms, are facing rising costs on many fronts, and the increase in cross-border card fees will only add to these pressures.
“It is vital that these businesses have every opportunity to succeed and are not burdened with disproportionate additional costs at this time,” he added.
Visa and Mastercard are additionally dealing with investigations by the UK’s funds watchdog over whether or not excessive costs imply that the £884bn card market is failing.
In June, the Payment Systems Regulator introduced a probe into cross-border interchange charges, warning that the networks’ skill to extend these costs probably confirmed that the market was “not working well”.
Interchange charges are tolls levied by Visa and Mastercard on behalf of banks for each debit or bank card fee that makes use of its community, so increased charges act as an incentive for lenders to decide on one community over the opposite.
The EU launched a cap in 2015 following considerations that the hidden charges had been resulting in a whole bunch of hundreds of thousands of euros in prices for firms and better costs for shoppers.
But final yr, each Visa and Mastercard raised the prices for on-line funds between the EU and the UK following the top of the Brexit transition interval.
Debit card interchange charges rose from 0.2 per cent to 1.15 per cent for each fee, whereas bank card charges rose from 0.3 per cent to 1.5 per cent.
Visa stated that almost all of UK retailers working domestically had not seen a rise in prices and that the brand new charges had been in keeping with these levied on transactions between the UK and different areas.
The watchdog additionally launched a separate market evaluate into different costs, together with these levied on companies which use Visa and Mastercard’s networks for processing funds.
In a letter to the committee in July, the PSR stated it didn’t rule out an interim cap on card networks’ charges, though it stated it didn’t anticipate imposing one within the rapid future.
Merchants have additionally voiced frustrations over the charges charged by networks. In November, Amazon stated it could cease accepting UK-issued Visa bank cards as a “result of high costs”, with an individual aware of Amazon’s place citing interchange charges as one of many sticking factors.
The ecommerce big reversed course in January, saying in a press release that it was working with Visa on an answer. The firms had beforehand clashed over charges in Australia and Singapore, the place Amazon had utilized a surcharge to using Visa’s bank cards till February.
Source: www.ft.com
