Visa and Mastercard have cited fraud and increased competition to justify post-brexit fee increases on cross-border payments from the UK.
The move has caused uproar in UK parliament and led to a market review by the Payment System Regulator, which says that it has not seen “evidence that shows that there have been significant changes in the costs” for card issuers.
In July, the Treasury Select Committee wrote to the card schemes requesting a justification for the fee hikes.
In response to the Committee, both companies argue that higher fees are justified by the greater risk of fraud in cross-border transactions, and the costs incurred by banks to prevent and detect such crime.
Visa and Mastercard also point out that they do not benefit directly from fee increases, as it is a customer’s card issuer, rather than the card payment system, who receive the additional revenue from interchange fees.
Commenting on the responses, Mel Stride MP, chair of the Treasury Committee, says: “All businesses, particularly small and medium sized firms, are facing rising costs on many fronts, and the increase in cross-border card fees will only add to these pressures. It is vital that these businesses have every opportunity to succeed and are not burdened with disproportionate additional costs at this time.”