New PayPal fees for payments between the UK and the rest of Europe are “unwelcome news” for British firms, according to the Federation of Small Businesses (FSB).
PayPal will charge British businesses a 1.29% fee for payments from the European Economic Area (EEA), and vice versa, from November. It will still be lower than the 1.99% charge for the rest of the world.
Most businesses pay about 0.5% in charges at the moment, which has remained unchanged since before the UK left the EU customs union and single market.
FSB vice-chairman Martin McTague said any rise in payment-platform fees was “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.”
He added that over the past three months, just over 40% of small exporters had reported that the value of their exports had dropped.
“We need to see stronger support for small exporters from the government, including a relaunched SME Brexit Support Fund and a reformed Tradeshow Access Programme.”
The EEA is made up of the 27 remaining European Union states plus Iceland, Liechtenstein and Norway.
PayPal blamed the rise in charges on its extra costs such as the increase in interchange fees between the UK and EEA.
EU rules capping credit and debit card interchange fees at 0.2% and 0.3% respectively ceased to apply to UK businesses since Brexit.
MasterCard has already announced that it will raise the fees it charges EU merchants when UK cardholders buy goods and services from them online from 0.3% to 1.5% – a fivefold increase. Visa is also expected to introduce a rise in charges.
