PayPal is introducing an additional service fee for international business transactions between the UK and Europe.

From 10 November, businesses operating in the UK and the European Economic Area (EEA) will be charged a 1.29 per cent fee for payments issued between the two regions.

The payments company said that it was changing the additional percentage-based fees for international business transactions as well as simplifying its market/region country classifications for these fees.

At the moment, most businesses pay 0.5 per cent in similar charges. This charge has remained the same since before the UK left the European Union.

European rules which cap credit and debit card interchange fees at 0.2 per cent and 0.3 per cent respectively, no longer apply to British companies following Brexit.

Earlier this year, Visa and Mastercard announced that their interchange fees would increase by five times from next month.

Retail Systems has reached out to PayPal for further comment on the move.

“This decision will severely impact many SMEs and sellers who have already struggled to stay afloat across the past 18 months," commented Luke Massie, chief executive of VibePay. "Margins have become increasingly tight as the middlemen in payment infrastructure have taken their cut, rather than those merchants who are really delivering for the consumer in the supply chain."

He warned: "This move, driven by Brexit, may be the final nail in the coffin for entrepreneurs and sellers, making their business models unsustainable due to excessive fees.

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