MasterCard to jack up interchange fees for UK cards when used with EU merchants

From October 15, Mastercard will charge 1.5 per cent of the transaction value for every online credit card payment from the UK to the EU, up from 0.3 per cent at the moment. For debit card payments, the fee will jump from 0.2 per cent to 1.15 per cent. The increase will benefit British banks and other card issuers, rather than Mastercard itself.

That’s from FT.

So not only EU websites will not ship to UK they might not take UK MasterCard or even no MasterCard at all.

Or when abroad they will hear / guess British and say card machine is broken. Cash only.


Monzo cards are quite distinct, ditto Revolut ones with the British flag on them.

Could this lead to better credit card benefits like in the US with a higher interchange fee?

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I can’t read the article but judging by the headline I’m assuming transactions within the UK is still 0.3%? If so I assume they’re only (wisely) delaying it as increasing fees for a struggling industry wouldn’t be a great look.

If they increase fees on transactions within the UK we could probably see a return to how it was before the EU directive was introduced, which was ‘better’ than it is now but not comparable to the US.

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Is open access article from 2018 which mentions that current caps will continue to apply for the domestic UK-UK fees.

It is only cross border ones where higher fees can be imposed, i.e. EEA-UK UK-EEA.


Since it only applies to UK->EU/EEA transactions, more likely you’ll see cards offering increased rewards for international spend, which already happens in some Asian countries. Two examples: the Japanese Delta AmEx Gold offers 1.5x bonus earnings for spend outside Japan, and the HSBC Singapore Visa Infinite earns 2x for international spend.

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I wouldn’t worry about that too much because MC is much bigger than Visa in most of Europe and they can’t take some MCs but not other.

So I know this is correct in general.

I did have issues in Germany a couple years ago where one or two places point blank said they did not take UK cards. I forced one to let me try and it was rejected (whether he did something on his till or it was genuinely set up that way). Never got to the bottom of it but was very odd.

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Curious why a couple of years it was an issue as it looks like the fees were the same at that point in time

Sounds about right.

Does this mean that Revolut with its EU accounts will not be affected whereas Monzo users may end up paying the fee?

I think the merchant pays the MasterCard fees.

And I don’t think they jack the prices up for US MasterCards

Well, it is about cross border payments. At the moment all Revolut cards in Europe are issued by the UK entity rather than the EU (Lithuanian or Irish) entity. Meaning potentially all of Revolut cards are affected too.

But for example, if Revolut keeps UK customers in the UK entity card issuer, and moves EU customers to a EU entity card issuer then only cross border payment will be affected. I.e. EU card buying things in the UK; and UK card buying things in the EU.

This must be good news for Monzo’s wrecked finances at the moment.

We also may start seeing some better credit card rewards when cards are used outside the UK or even no fx fee.

I doubt it’ll make much difference while the pandemic is ongoing. Once travel is more common, then definitely.


And potentially bad news for consumers as prices go up.

But hey, you might get some ‘points’ so that’s not a win but portrayed as one.

That’s if acquirers passed on the saving from the caps. With how many places take uncapped interchange amex cards it must make little to no difference, I just want to get free stuff from buying things I’d buy anyway without paying interest.

Yeah, but who’s paying for the “free stuff” ultimately?

Clue: You are, in higher prices.

It’s basic economics.


I don’t have a choice to pay for those fees if I want to shop at that business so I may as well claw some of that back.

@jamar0303 Yeah you also see this on one or two Canadian cards when they are being used in the US (as interchange fees are a bit higher).