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Mastercard, Visa and fintech firm Revolut have lost a legal challenge against the UK’s Payment Systems Regulator (PSR) over its authority to cap interchange fees on cross-border online card payments.
The case followed a decision by the PSR in late 2024 to proceed with plans to impose price caps on the fees charged by Visa and Mastercard to UK merchants when European consumers make online purchases. The regulator argued that the move was necessary to address sharp post-Brexit increases in card payment costs.
Visa, Mastercard and Revolut took the matter to the High Court in London, contending that the PSR lacked the legal power to introduce such price controls. However, Justice John Cavanagh dismissed the challenge, ruling that the regulator is within its statutory authority to impose the caps.
Reacting to the judgment, David Geale, Managing Director of the PSR, said the ruling reinforces the regulator’s mandate to protect businesses and consumers.
“We welcome the High Court’s decision, which confirms our powers to ensure card payment costs are fair for UK businesses and consumers. This enables us to continue our work to make sure cross-border interchange fees are set at an appropriate level,” he said.
As at the time of publication, Visa, Mastercard and Revolut have not issued public statements on the ruling.
Background to the Fee Cap Dispute
In outlining its rationale for intervention, the PSR noted in 2024 that Visa and Mastercard increased cross-border interchange fees significantly between 2021 and 2022. Debit card fees reportedly rose from 0.2 per cent to 1.15 per cent, while credit card fees increased from 0.3 per cent to 1.5 per cent.
According to the regulator, the post-Brexit changes have added an estimated £150 million to £200 million annually to costs borne by UK businesses that sell online to European customers.
The PSR has since consulted on the methodology for determining an appropriate cap and says the feedback will guide its next regulatory steps.
Winners and Losers
Legal experts say the ruling could have far-reaching implications across the payments ecosystem. Michelle Quinn, a partner at Grosvenor Law, noted that the impact will not be evenly distributed.
“If the proposed cap comes into effect, retailers could gain much-needed relief by lowering the costs incurred every time an EU customer pays online, and consumers may benefit if those savings are passed on through lower prices,” she said.
However, Quinn warned that banks and fintechs face pressure. “Interchange fees are a significant revenue stream. Capping them too tightly could mean some providers lose money on each transaction, posing real risks to their business models.”
For the UK payments landscape, the court’s decision clears the way for the PSR to press ahead with tighter oversight of cross-border card fees, marking a significant development in post-Brexit financial regulation.
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