MasterCard to raise UK card fees due to Brexit

The credit card company announced the changes to its interchange charges

A person paying with Mastercard. Courtesy Mastercard

Credit card company MasterCard said Monday that it will charge five times more in so-called interchange fees for UK customers buying online goods and services from EU companies following Brexit.

"As a result of the UK leaving the European Economic Area (EEA), MasterCard will adapt interchange rates on UK cards," the group said in a statement.

When a customer pays a merchant with a credit or debit card, the store's bank pays an "interchange fee" to the cardholder's bank.

Card operators then collect the fees on behalf of banks to process the transaction.

MasterCard stressed that the interchange fee increase would only apply to online sales and would not affect in-store transactions.

The group will raise the credit card fee to 1.5 per cent of the value of each transaction starting October 15, compared with the current level of 0.3 per cent.

The debit card fee will be raised to 1.15 per cent, up from 0.2 per cent.

MasterCard added that consumers "should not feel any impact of changes in interchange fees", and that its own commissions would remain unchanged.

Main competitor Visa has not yet made any announcement on its fee structure.

After Visa, MasterCard is the second largest credit card issuer in the European market.

Britain finalised its divorce from the European Union on January 1, but the nation's hard-fought Brexit trade deal did not encompass the financial services sector.