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Ketharaman, I am not sure about only 5% of UK citizens travelling and incurring credit and debit 'foreigh currency fees', that seems a very low percentage.  And many bank branches offer currency exchange services which are on-par at the the 3+% fee levels UK banks are tacking onto internatioal credit and debit sales.  The fellow from Dutsch above rightly points out the UK bank charges are amongst the highest in the world. 

However, the issue of whether the fee levels are on-par with physical curreny exchange fees is a sideshow anyhow. The issue is whether the fees have been coordinated amongst a few banks, and what levels of disclosure there are.

It is interesting the UK government regulators jump all over merchants surcharging yet has sat on their hands for over a decade with regards to looking at the "currency conversion fees" a few very large UK Issuers have coordinated at 3% or more and charge their customers' for international purchases on credit and debit card purchases.

Paypal should start running promotions to incent its consumer customers to steer charges away from anchored Mastercard accounts.  Lots of ways to do it though one would be to pay bonuses to customers who substitute their bank account or other card brands for MasterCard accounts as anchorts in the paypal accounts.  Paypal should also make it clear they are very willing to convert all the cobranded MasterCard buisiness debit cards they have to another brand. 

This is no suprise though, and has been the case since the 1990s, when average issuer fraud losses were managed down below 10bp of card sales.   As the article points out there are larger amounts of fraud losses, much of which are currently being pushed onto merchants through chargebacks and fees, particularly in the card-not-present sector.  For EMV/chip cards to fit into the traditional financial institution model of seeing a 2-3X payback on an investment within a few years, it will be necessary for FIs to work with some large retailers to get a loyalty program implemented with instant point of sale redemption which reduces retailer cost or drives more retailer sales, and shifts more volumes to the Issuers. Obviously this sort of program is only effective with large national retailers where consumers frequently purchase, so the number of good dance partners are few.  

However, as it appears the payment networks are going to push U.S. Issuers, Acquirers, and the Merchants into EMV/chip acceptance anyhow, there is reason why the enterprising issuer should not try to leap into some arrangements with one or more retailers now.

I wonder how and if the token technology will be integrated with merchant sites for purchasing.  It's interesting that Standard Chartered chose to go the internal token route and leave the Verified by Visa and/or MasterCard securecode services on the sidelines.