Lootman wrote:Has Visa been trying to jack up its interchange fees? Both Visa and MC historically had low interchange fees in the UK, relative to what they charge in the US. That is why welcome bonuses, cashback and point/mile earning rates on UK cards are low compared to what you get in the US.
Whereas Amex always had high fees, which is why they are less well accepted in the UK.
I'm surprised you weren't aware of this given your wide reading across the spectrum on matters to do with Brexit. But yes, this is one of those stories where Brexit plays a big part, it's not the only reason but it interacts with other factors to make things much worse for people in the UK than elsewhere.
In 2015 the European Parliament voted to introduce the Interchange Fee Regulation in an attempt to standardise card processing across the Single Market and give more transparency on fees. It also capped debit card interchange fees at 0.2% and credit cards at 0.3% for transactions where merchant, acquirer and card issuer were all based in the EU (and extended to the EEA).
Following Brexit, the UK onshored the IFR in the Interchange Fee (Amendment) (EU Exit) Regulations 2019 - so the 0.2/0.3% caps apply on transactions with UK cards with UK stores.
However, when you buy something from amazon.co.uk, you're not buying from a UK company, you're buying from Amazon Europe Core SARL in the more ... tax-efficient ... location of Luxembourg. Before Brexit this didn't matter, as a British card transaction with a Luxembourg company still counted as an EE-to-EEA transaction, but after Brexit it's a "foreign" transaction and so isn't regulated. And at the moment the card companies are looking at any way to increase revenue after the pandemic so after Brexit happened they announced that fees for these "foreign" transactions would be going up to 1.5%.Bloomberg
has more detail - reading between the lines, although both are going to 1.5% Visa is being more aggressive than Mastercard about its price rises and eg having separate rates for online purchases, whereas Mastercard are unwilling to upset their relationship with Amazon's credit card division. And the UK is a pretty small pawn in a wider battle ranging from the US to the EU.
Amex doesn't have interchange fees as they combine the roles of "bank" and "card company" so they're not strictly comparable (and are only partly subject to the IFR rules), but some of their rates go down to 1.3% although 2-3% is more typical, so yes Visa/Mastercard are starting to encroach on Amex territory. But the usual argument for ignoring Amex is 1) they're 1% of the UK market and 2) their cardholders spend more, so overall profits are better if you accommodate Amex holders. The UK and Ireland are rather unusual in having Visa with >80% of the credit card market, other than Spain they're <50% in all other European countries.