Following a 2015 EU regulation that put a cap on interchange fees, the UK adopted reforms banning traders from charging customers a fee at checkout. Although the intentions of such reforms were fundamentally benign and designed with consumers in mind, they have backlashed causing fees to skyrocket and – more alarmingly – become more opaque. If fees per See Payment instrument. More were previously visible to customers, allowing them to choose the cheapest A transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More method according to the situation, these are now incorporated in the final cost and therefore far from transparent.
According to The Guardian, “Visa and MasterCard, which dominate the market, have simply increased scheme fees, in some cases by up to 100%”. Indeed, UK traders are now faced with £1 billion extra costs a year that are paid to Visa alone.
Today, Visa and MasterCard control over 60% of the card market in the UK and predictions hint at it reaching 90% by 2026. This is troublesome considering that unaware consumers are carrying the burden. Also, should the reach of the card market indeed reach the forecast, what would happen with another system failure like the one of June 1st?
The problem is that neither Visa nor MasterCard want to reveal their card scheme fees, simply stating that they aren’t profiting from the current situation. Both payments giants justify these fees as a necessity to maintain costly cyber-security systems and consumer protection measures, but retailers have had enough. In fact, they are starting raise their voices and asking the government to put growing fees to a halt.
Chief Economist Callum Godwin of the CMSPI payments consultancy states that “The latest increases have been targeted at those with a low average transaction value, such as local cafés and corner shops, hitting the weakest when the high street is already suffering”. He adds that both Visa and MasterCard are simply taking advantage of the situation as they know that today refusing their services can pretty much mean professional suicide.