PayPal To Increase Fees for Businesses Selling Essential Goods

One of the prominent digital payment providers, PayPal announced to increase its processing fees on items ordered in the United Kingdom from Europe. 

The payment processing company seems to be following the footsteps of brands like Visa and Mastercard. 

Starting this month, November 2022, the two finance companies will start offering higher processing fees for businesses in the UK and those in Europe.

According to the report, affected United Kingdom companies will be charged a 1.29% fee for payments from the European Economic Area and vice versa, PayPal said.

Before this update, most of these companies paid about 0.5% in similar charges, which have remained unchanged even before the UK left the EU customs union and single market.

While the bills will be added to retailers’ invoices, struggling businesses may increase goods’ prices to meet the cost of sending items abroad. This will not only allow them to meet up with the new charges give their business a financial boost.

Earlier this year, both Visa and Mastercard stated their plans to increase the interchange fees for items bought by UK-based customers from most European countries.

These interchange dues were concluded in 2015 over concerns that hidden costs were leading to extra charges for both buyers and sellers. 

According to the report, charges were capped at 0.2% and 0.3%. However, the rules were no longer in effect because of Brexit…

No doubt, this update will affect online payment processing with EU-based companies, most especially in areas like online retails, hospitality, and travel. 

Just like traditional financial institutions, interchange payments are imposed every time a payment is processed, but in most cases, the card-issuing banks are responsible for the fees. 

At the beginning of this year, Kevin Hollinrake, chairman of the all-party parliamentary group on Fair Business Banking, asked regulators to introduce a new cap.

“This smacks of opportunism and I would urge the regulators to step in as a matter of urgency to ensure that financial institutions do not use Brexit as an opportunity to hike up costs that consumers will ultimately bear,” he said.

Another consumer rights professional, Adam French, also 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.”


Earlier this year, Mastercard and Visa announced to increase the processing fees for UK customers buying from Europe, and vice versa. Not long after that, PayPal also posted a similar update that will take effect this month. Unlike the former fee that was capped at 0.2% and 0.3%, shoppers will now pay 1.29%. 

Would you still use PayPal to make payments after this update? Let us know your view in the comment section. 

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