Banks Ask EU to Continue Access to UK Clearing Houses
A “major” market disruption is anticipated if Brussels fails to extend a permit granting EU banks access to U.K. clearing houses, the Financial Times (FT) reported Thursday (Sept. 16).
Banks in the U.S. and Europe, as well as asset managers, have implored Brussels to extend the license, according to the report.
Leading lobby groups have called on the European Commission for additional time to allow the market to transition business away from the U.K., the report stated. In 2020, the EU extended the permit for banks to clear deals in London until the middle of 2022.
The turmoil could inflame various issues stemming from the U.K.’s exit from the EU in January 2020, according to the report. The impacts of Brexit — when the U.K. withdrew from the EU — are still causing a ripple in the financial arena.
Last week, PayPal announced it would increase merchant fees between businesses operating in the U.K. and those in the European Economic Area, according to PYMNTS.
Read more: PayPal Hikes Merchant Fees Between UK, European Businesses
The new fees apply to all the U.K., plus Guernsey, Jersey, Gibraltar and the Isle of Man. Beginning in November, the merchant fee will be 1.29%, up from the current rate of 0.5%. Legislation in Europe limits interchange fees to 0.2% and 0.3%. However, those regulations no longer apply to businesses that operate in the U.K.
Mastercard, too, announced an increase in card fees, PYMNTS reported. The change is expected to take effect beginning in October and will up credit card fees to 1.5% of the purchase, an increase of 0.3%. Debit card fees will increase from 0.2% to 1.15%.
See more: Mastercard Planning Higher Fees for UK EU Transactions
The EU had capped interchange fees on behalf of banks in 2015 following complaints of hidden fees and higher prices. However, Mastercard told retailers that purchases made between the U.K. and the European Economic Area are now considered inter-regional following Brexit, meaning the cap no longer applies.