UK online shoppers are facing a price hike when buying from the EU as payments company Visa is set to implement a fivefold increase to its interchange charges for UK customers.
Interchange payments are levied on behalf of banks each time a payment is made, with the money then passed on to the card-issuing bank.
Sky News has learnt that Visa is set to increase the charge to 1.5% for online credit customers. Visa, the biggest issuer of debit cards in the UK, will also increase the rate for debit card transactions, from 0.2% to 1.15%.
Rival Mastercard announced a similar move in January with new charges beginning in October. Visa is expected to bring in the charges in six months.
Visa is understood to have notified regulators about its plans and will inform its roughly 4,000 clients of the changes later this week.
Passed to consumers
According to the Telegraph, the higher fees if confirmed “would apply to purchases made online in the UK from companies based in the EU”.
Although the increased costs will be on businesses, the fear is that consumers will ultimately pay more, James Daley of consumer group Fairer Finance told the Telegraph.
“If you are buying things online and the people you are buying from now have an increase in their costs, they aren’t just going to absorb that,” he said. “Online retailers are generally trading on pretty thin margins and they are going to have to pass those costs on.”
The rise will particularly affect sectors such as online retail, hospitality and travel.
The move is the latest change facing online shoppers, following amendments to eBay charges announced in November. The online marketplace has switched from using PayPal, a former subsidiary of eBay, for payments and has taken it inhouse reported the Sun.
Buyers can still use PayPal for purchases but the firm no longer gets a 2.9% cut of the deal, plus 30p per transaction.
Most of that money now goes directly to eBay which already receives 10% of the value of any sale.
Online shoppers were also hit with overnight price hikes from Amazon in January when the platform started deducting VAT at source from sellers following HMRC action to close a loophole.
The result was an increase of around 20% on many Chinese sourced goods, with the suspicion that they were not paying the tax previously, IOE&IT Daily Update reported.