Fees for business payments between companies in UK and European Economic Area to rise to 1.2 percent as interchange costs rise and EU limits end
Companies in the EEA will now pay a 1.29 percent fee when making payments to the UK and vice-versa.
The fee is a hike from the 0.5 percent currently paid by most businesses, and is due to increased costs such as the rise in interchange fees between the UK and the EEA, PayPal said.
The charges are due to begin in November, following a mid-October rise in interchange fees by Visa and Mastercard, which will see them rise fivefold.
PayPal’s fees have not been changed since the UK left the EU customs union and single market.
EU rules capping credit and debit card interchange fees at 0.2 percent and 0.3 percent no longer apply to UK businesses.
The EEA includes the 27 members of the EU as well as Iceland, Liechtenstein and Norway.
The new PayPal fees affect all of the UK, Guernsey, Jersey, Gibraltar and the Isle of Man, the company said.
The hike still sees fees lower than the 1.99 percent PayPal charges for the rest of the world. Some businesses with customised agreements with PayPal will, however, see their existing rate raised by 1.29 percent.
PayPal first announced the fees last month, on the same day that it said it would allow users outside the US to purchase Bitcoin, but the company has only now released details.
‘Highly competitive market’
“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,” PayPal said.
The Federation of Small Businesses (FSB) said the rise was “unwelcome news” and that higher fees, amongst other factors, were focing many smaller companies to stop selling to EU customers.
“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,” said vice-chairman Martin McTague in a statement.
Over the past three months just over 40 percent of small exporters said the value of their exports had dropped, he said.
McTague called for “stronger support” from the government, including a relaunched SME Brexit Support Fund and a reformed Tradeshow Access Programme.