PayPal raises fees between UK and Europe
PayPal is introducing new fees for payments between businesses in the UK and those in Europe, from November.
British businesses will be charged a 1.29% fee for payments from the European Economic Area and vice versa.
Most currently pay about 0.5% in similar charges, which have remained unchanged since before the UK left the EU customs union and single market.
PayPal said it was now incurring extra costs, such as the rise in interchange fees between the UK and EEA.
European rules capping credit and debit card interchange fees at 0.2% and 0.3% no longer apply to UK businesses.
And both Visa and Mastercard have announced they will raise them fivefold from mid-October.
The EEA is made up of the 27 remaining European Union states plus Iceland, Liechtenstein and Norway.
And the new charges apply to the whole of the UK, Guernsey, Jersey, Gibraltar, and the Isle of Man.
Most businesses will see their current 0.5% fee raised to 1.29% – still lower than PayPal’s standard 1.99% for the rest of the world – but some of those with their own customised agreements with PayPal will have their existing rate raised by 1.29%.
The new fee was first mentioned on the same day the company announced it would accept cryptocurrency Bitcoin but details were not released until this week.
PayPal said it was “simplifying” its cross-border fees.
“In a highly competitive market, this will make it easier for these businesses to compare PayPal’s pricing with that of other providers and to better appreciate the value we provide,” it said.
The Federation of Small Businesses (FSB) said any rise in payment-platform fees “is unwelcome news for small businesses and entrepreneurs”.
“Since the start of the year, around one in four small exporters have stopped exporting to the EU, citing amongst other reasons the costs involved in selling to EU-based customers,” vice-chairman Martin McTague said.
And over the past three months, a little over 40% of small exporters said the value of their exports had dropped.
“We need to see stronger support for small exporters from the government, including a relaunched SME [Small and Medium Enterprises]Brexit Support Fund and a reformed Tradeshow Access Programme,” McTague added.