Interchange fees are paid by the merchant’s bank (the acquirer) to the customer’s bank (the issuer) and account for approximately 70% of the transaction fee. These are assessed and determined by card networks like Visa and Mastercard.
Starting from October 15th 2021, Mastercard interchange fees for consumer card-not-present transactions between the UK and EEA will increase from 0.20% to 1.15% for debit cards and from 0.30% to 1.50% for credit cards.
For Mastercard, the new rates apply unilaterally for consumer card-not-present transactions from UK-issued cards at EEA-merchant locations. The consumer card-not-present interchange rates for EEA-issued cards at UK-merchant locations remain unchanged.
Starting from October 16th 2021, and similar to Mastercard, interchange fees for consumer card-not-present transactions between the UK and EEA will increase from 0.20% to 1.15% for debit cards and from 0.30% to 1.50% for credit cards. Interchange fees for business cards will be set at 1.60% while corporate and purchasing cards are revised to 1.80%.
For Visa, the new interchange fee will apply bilaterally. Both transactions with UK-issued cards at EEA merchants and EEA-issued cards at UK merchants will receive the updated interchange rates.
From October 16th 2021, interchange fees will no longer be returned for consumer refund transactions between the UK and the EEA both for card-present and card-not-present. This change will also be applied bilaterally.
The interchange fees for consumer card-present transactions between the UK and EEA countries will remain unaffected for both Visa and Mastercard.
As a consequence of the aforementioned revisions from Visa and Mastercard, Paypal recently announced an increase in its fees for transactions between the UK and the EEA. Most businesses can expect their current charge of 0.5% to be raised to 1.29%, which is still lower than PayPal’s standard 1.99% fee in transactions for the rest of the world.
What Will Be The Impact for Switch Clients?
From October 15th for Mastercard and 16th October for Visa, you might see an increase in your card fees depending on the agreement you have with your payment provider. If you use the Switch Reconciliation service, you can check card transactions fees in the settlement details under Transactions > Payments.
Want to know more? Contact your Customer Success Manager at Switch or reach our support team through email@example.com.