PSR consults on cross-border card fees limit

The initiative comes after the PSR concluded that UK businesses increased their fees to excessively high levels, with the regulator now planning to discuss introducing a cap on these cross-border card fees imposed on European consumers.

How do fees affect UK businesses?

Initially, the watchdog published an interim report underlining that card schemes did not face competition in the offering of scheme and processing services to acquirers. The research highlighted that between 2019 and 2024, the two main global card schemes, Mastercard and Visa, scaled their scheme and processing fees by over 30% even if the quality of service has not witnessed a dramatic increase. In addition, the PSR has been working on documenting how interchange fees are applied on credit and debit cards issued in the European single market when acquiring online from UK-based businesses since Brexit was modified when the bloc’s cap stopped to apply on Britain.

Furthermore, the PSR mentioned in a statement that the findings confirmed that, due to a lack of competition, Mastercard and Visa could scale cross-border interchange fees to out-of-all-proportion levels, in turn negatively affecting UK businesses. The regulator also confirmed that this fee increase led to businesses losing around GBP 150 to GBP 200 extra per year.

Now, the regulator plans to consult on a possible short-term, interim limit on fees, before implementing a longer-lasting cap. The PSR awaits feedback from industry participants until 7 February 2025. When commenting on this announcement, representatives from Visa and Mastercard, which account for 99% of debit and credit card payments in the UK, mentioned that Visa continues to dispute the PSR’s findings and intends to ensure that any measures do not lead to uncertainties or unintended consequences while Mastercard underlined that artificial controls on interchange do not reflect the commercial certainty of the current market and can negatively affect the value individuals and businesses benefit from card payment if not put at the proper level.