Retailers face higher interchange fees after retail giant Tesco’s bank switched its Finest Platinum MasterCard to World MasterCard.

Tesco has rebranded its Finest Platinum MasterCard to a Finest World MasterCard to give “more valuable benefits” to its customers.

The new card operates on a higher interchange fee, understood to have risen from 0.8% to about 1.3%. The interchange fee is the amount from a customer transaction that must be passed on to the card issuing bank, so the change means retailers will have to pay higher fees for accepting Tesco’s rebranded card.

A Tesco spokeswoman said the interchange fees are higher but “there isn’t a single set fee as they differ for different types of transactions”. She maintained: “This is a better product, offering improved benefits.”

She said Tesco also takes on more chargeback liability under World MasterCard rules. The rules place limits on the value threshold for chargebacks for certain types of transactions. Tesco has about 800,000 World MasterCard holders and will add more as renewals come up.

But one retailer said: “It is disappointing Tesco has done this because other retailers will take a hit.”

The retailer said it is unclear if Tesco is reinvesting the interchange fee into rewards for customers, but “it still hurts other retailers because those rewards are being paid by different merchants”.

Another source said: “The new Tesco MasterCard competes with Amex as it is a top-end model but unlike Amex, if retailers accept MasterCard then they have to accept all types. So retailers are stuck paying the higher interchange fees.”

Tesco said on its website that if customers do not want the Finest World MasterCard, “we can arrange for your account to be transferred to a Tesco Platinum Visa Card or Tesco Classic MasterCard”.

Tesco began switching its cards earlier this year as they came up for renewal. The grocer explains online that the first benefit for users is an additional 650 Clubcard points and “further benefits will be communicated at a later date”.