PSR proposes cap on Visa and Mastercard cross-border interchange fees

The UK’s Payments Systems Regulator (PSR) has proposed a provisional cap on cross-border interchange fees charged by Mastercard and Visa on transactions made to the European single market.

The regulator on Wednesday explained that Mastercard and Visa significantly raised the cross-border interchange fees paid by UK businesses in 2021 and 2022 and that it had been examining the level of these fees.

Since the UK left the EU, previously regulated caps on UK-European Economic Area (EEA) card-not-present interchange fees for retail transactions no longer apply. Visa and Mastercard have increased the interchange fees on online purchases made by EEA consumers at UK businesses and vice versa fivefold, from 0.2 per cent to 1.15 per cent for debit cards, and 0.3 per cent to 1.5 per cent for credit cards.

Upon review, the PSR estimates that UK businesses paid an extra £150-200 million due to the fee increases, and that UK businesses have little choice but to pay the increased costs as Mastercard and Visa cards continue to be the dominant form of payment in the country.

With this in mind, the PSR has set an initial time-limited cap of 0.2 per cent for UK-EEA consumer debit transactions and 0.3 per cent for consumer credit transactions (where the transactions are made online at UK businesses).

A lasting cap on these interchange fees will be introduced in the future, once further analysis has been carried out to establish an appropriate level, the PSR said.

Chris Hemsley, managing director at the PSR, said: “In this market review we have provisionally found that the fees charged by Mastercard and Visa to UK businesses which accept payments from within the EEA are likely too high. In short, at this stage, we do not think this market is working well.

“Should we ultimately conclude this is the case, our interim report sets out a range of potential solutions which could be implemented. They are designed to make sure cross-border interchange fees are set at a level that better reflects the interests of all Mastercard and Visa users. We are also considering the longer-term outcomes so we can determine how we may need to adapt these fees in future.”



Share Story:

Recent Stories


Safeguarding economies: DNFBPs' role in AML and CTF compliance explained
Join FStech editor Jonathan Easton, NICE Actimize's Adam McLaughlin and Graham Mackenzie of the Law Society of Scotland as they look at the role Designated Non-Financial Businesses and Professions (DNFBPs) play in the financial sector, and the challenges they face in complying with anti-money laundering and counter-terrorist financing regulations.

Ransomware and beyond: Enhancing cyber threat awareness in the financial sector
Join FStech editor Jonathan Easton and Proofpoint cybersecurity strategist Matt Cooke as they discuss the findings of the State of the Phish 2023 report, diving into key topics such as awareness of cyber threats, the sophisticated techniques being used by criminals to target the financial sector, and how financial institutions can take a proactive approach to educating both their employees and their customers.

Click here to read the 2023 State of the Phish report from Proofpoint.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.

Future of Planning, Budgeting, Forecasting, and Reporting
Sage Intacct is excited to present FSN The Modern Finance Forum’s “Future of Planning, Budgeting, Forecasting, and Reporting Global Survey 2022” results. With participation from 450 companies around the globe, the survey results highlight how organisations are developing their core financial processes by 2030.