Card payment

Bad news for online shoppers – it looks like Visa will be following Mastercard’s lead by hiking its interchange fee.

An interchange fee is basically a transaction fee that merchants pay whenever a customer uses a credit or debit card. The money goes to the card issuing bank, rather than Visa, to cover things like admin fees, and loss through fraud and bad debts.

At the moment, Visa charges EU merchants 0.3% for credit card and 0.2% for debit card payments, regardless of whether the transaction is in person or online.

But it seems the card provider will be moving UK-issued cards from the Intra Visa Europe interchange fees bracket to the Inter Visa Europe interchange fees one, which means that the fees will become 1.5% for credit card and 1.15% for debit card payments made online.

Like Mastercard, in-person payments are not affected.

Visa hasn’t publicly announced the change yet, so we don’t know when this will come into effect, but Sky News made the revelation earlier this week.

As I explained previously, the effects are purely speculative at the moment.

Interchange fees are paid by merchants rather than consumers, and under EU law, merchants are not allowed to pass these fees directly onto consumers anymore.

But that doesn’t mean the charges won’t be passed on in some other way, for example, if a merchant sets different prices for different currencies or increases the service charge or shipping fees for UK orders.

It would also be interesting to see whether this will increase demand for alternative forms of payment, such as Klarna.