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Revolut and Visa have launched legal challenges against the Payment Systems Regulator (PSR) over its decision to impose a cap on interchange fees for cross-border online transactions, according to reports from the Financial Times.
In late 2023, the PSR announced its decision to proceed with regulations limiting the fees that Visa and Mastercard charge UK merchants when European customers make online purchases. The regulator justified its move by highlighting that, between 2021 and 2022, Visa and Mastercard increased cross-border interchange fees fivefold—rising from 0.2% to 1.15% for debit card transactions and from 0.3% to 1.5% for credit cards. The PSR estimated that this post-Brexit price hike has resulted in additional costs of £150-200 million per year for businesses.
However, industry players are now contesting the decision. Revolut has initiated a judicial review, arguing that the PSR has overstepped its legal authority.
“We disagree with the PSR’s assessment and believe it has acted beyond its statutory powers in imposing these caps. We have therefore requested the court to review, and ultimately overturn, the PSR’s decision,” stated the fintech firm.
Visa also expressed concerns about the regulator’s approach, emphasizing the importance of legal clarity in economic regulation.
“We respect the PSR’s role as an economic regulator. This narrow legal action focuses only on the PSR’s legal authorization and process related to price setting to ensure a fair and thorough review, providing clarity to the industry. This is critical for future growth and investment in the UK,” Visa stated.
Despite the pushback, the PSR remains firm in its stance, with a source close to the regulator affirming that it intends to “robustly” defend its decision.
This development comes just days after the PSR signaled its intent to take action against Visa and Mastercard over sharp increases in processing fees for domestic transactions, further intensifying regulatory scrutiny on the payment giants.
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