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Online shoppers buying from a Europe-based company could see an increase in prices if businesses decide to pass Mastercard’s planned European fee rise onto consumers.
Mastercard is planning to increase the fee on UK-based shoppers buying online from Europe-based companies on 15 October 2021. This will see Mastercard credit card transaction fees increase to 1.5%, from its current rate of 0.3%, and debit card transaction fee increase to 1.15%, up from 0.2%. Although this fee will be charged to the traders, some predict that companies will pass the charges onto consumers by increasing prices.
This could impact consumers buying a range of goods and services, including those booking hotels and flights, as well as shopping on Amazon UK, which is a Luxembourg-based company.
In 2015, the European Union (EU) introduced a cap on transaction fees when buying from a European-based company in response to concerns that these fees were leading to high costs for companies and increased prices for consumers. After the 1 January 2021, the UK was no longer part of this fee cap, which has resulted in Mastercard bringing its fees in-line with other non-EU countries.
Mastercard said in a statement: “As a result of the UK leaving the European Economic Area, Mastercard will adapt interchange rates on UK cards to the commitments it gave the European commission in 2019 for non-EEA card transactions.
“In practice, only EEA merchants making e-commerce sales to UK cardholders will see a change. Interchange is not a consumer-facing cost but the fees paid between merchants and banks for the provision of payments. Consumers should not feel any impact of changes in interchange fees.”
Although consumers will not see the increase in transaction fee directly, many are concerned that the rise will result in consumers having to pay higher prices.
If the fees are passed onto consumers, they may not see a significant increase in individual purchases but over time small increases could add up for already financially stretched households. For example, a family booking a summer holiday abroad using a credit card online, where both the airline and hotel are based in Europe, costing £1,800 would pay an extra £27 in total if the exact 1.5% was passed onto the customer. Although this may not seem a lot, if the same family regularly shopped online using a European-based company, such as Amazon, they may find that the cost of making small, regular purchases with a 1.5% extra charge added soon mounts up.
For those who are concerned about possible price increases, an alternative may be to use an international money transfer company when buying goods from European-based companies. For example, Ryan Hall, marketing manager at xe.com, told Moneyfacts.co.uk that: “Over 5% of our UK based money transfers are for goods and services abroad and we find lots of clients come to us as a more cost-effective solution than the banks, especially when the goods are expensive. We also don't charge any additional fees for debit card use and as a Financial Conduct Authority (FCA)-authorised payments service, we do carry out the necessary checks on fraudulent activity.”
Consumers should be aware that the fee is only added to transactions made online. This means that when using a credit card or debit card in Europe, the fee will not be added. When using a credit or debit card overseas, however, consumers may still be charged a fee for using the card abroad – although this can often be avoided by using a travel credit card that doesn’t charge foreign usage charges.
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Lloyds Bank will incentivise any customers switching from another bank to its Club Lloyds or Club Lloyds Platinum Account with a £125 cash bonus. The offer is available with immediate effect and is only available through the Current Account Switch Service (CASS) until 27 June.
Lloyds Bank will incentivise any customers switching from another bank to its Club Lloyds or Club Lloyds Platinum Account with a £125 cash bonus.
Britain’s GDP contracted by 0.1% in March, according to data released by the Office for National Statistics (ONS) today. “The March decline highlights the pressure the economy is now coming under from the cost of living squeeze and the danger of it falling into outright recession later this year,” said Rupert Thompson, Investment Strategist at Kingswood. The services sector, which includes contributions from education, arts and entertainment, and food service among others, fell 0.2% last month and was the main contributor to this decline.
Britain’s GDP contracted by 0.1% in March, according to data released by the Office for National Statistics (ONS) today.
Four in ten savers have been forced to use their savings account to help cope with the rising cost of living over the past 12 months. This is according to Yorkshire Building Society and the Centre for Economics and Business Research’s Inflation Nation report, which was released today.
Four in ten savers have been forced to use their savings account to help cope with the rising cost of living over the past 12 months.
Lloyds Bank will incentivise any customers switching from another bank to its Club Lloyds or Club Lloyds Platinum Account with a £125 cash bonus. The offer is available with immediate effect and is only available through the Current Account Switch Service (CASS) until 27 June.
Lloyds Bank will incentivise any customers switching from another bank to its Club Lloyds or Club Lloyds Platinum Account with a £125 cash bonus.
Britain’s GDP contracted by 0.1% in March, according to data released by the Office for National Statistics (ONS) today. “The March decline highlights the pressure the economy is now coming under from the cost of living squeeze and the danger of it falling into outright recession later this year,” said Rupert Thompson, Investment Strategist at Kingswood. The services sector, which includes contributions from education, arts and entertainment, and food service among others, fell 0.2% last month and was the main contributor to this decline.
Britain’s GDP contracted by 0.1% in March, according to data released by the Office for National Statistics (ONS) today.
Four in ten savers have been forced to use their savings account to help cope with the rising cost of living over the past 12 months. This is according to Yorkshire Building Society and the Centre for Economics and Business Research’s Inflation Nation report, which was released today.
Four in ten savers have been forced to use their savings account to help cope with the rising cost of living over the past 12 months.
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