Urgent warning issued to any British business which uses PayPal

PayPal is poised to hike fees for businesses selling everything from toys to clothes.

UK businesses will be charged a 1.29% fee for payments from the European Economic Area and vice versa.

The payments giant is following in the footsteps of rival Mastercard and Visa.

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Many firms who have struggled during the pandemic could find themselves passing on the extra costs to consumers, it is warned.

Adam French, Which? consumer rights expert, added: “Consumers are already facing significant inconvenience and extra costs when shopping with businesses based in the EU and Mastercard’s decision to reimpose these hefty charges will come as another blow.

“The success of Brexit will be judged by how it affects our everyday lives, so the government must not neglect these consumer issues. Ministers must do a better job of explaining a confusing array of new rules and regulations and the government needs to work with the EU with a view to removing these costs as part of future negotiations.”

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Interchange Visa fees will increase to 1.5% for online credit card payments, and for debit card transactions, the rate will go up from 0.2% to 1.15%.

The move to increase interchange fees will bring it into line with MasterCard, which is upping its rates from October of this year following a confirmation in early January.

Kevin Hollinrake, chair of the parliamentary group on Fair Business Banking, told the Financial Times, which first reported the story, that the move “smacks of opportunism”.

Callum Godwin, chief economist at CMSPI, the global payments consultancy, added: “[This will happen] anywhere the consumer is in the UK and the merchant is in the EU.”

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