The UK’s Payment Systems Regulator (PSR) has proposed a new cap on cross-border interchange fees in an effort to protect UK businesses from overpaying when accepting payments from cards issued in the European Economic Area (EEA). The PSR’s calls follow fee increases by Visa and Mastercard, which raised interchange fees from 0.2% to 1.15% for debit cards and from 0.3% to 1.5% for credit cards. The PSR’s proposed cap would apply to outbound interchange fees only and is expected to be followed by a more lasting cap after further market analysis.
The PSR is taking action after a three-year review into the impact of interchange fees on UK businesses. The regulator estimates that UK businesses paid an extra £150m to £200m last year due to the fee increases by Mastercard and Visa. The PSR plans to publish its final report on cross-border interchange fees in the first quarter of next year.
Key points:
- The UK’s Payment Systems Regulator (PSR) has proposed a cap on cross-border interchange fees to protect UK businesses from overpaying
- Visa and Mastercard recently raised interchange fees from 0.2% to 1.15% for debit cards and from 0.3% to 1.5% for credit cards
- The PSR’s proposed cap would apply to outbound interchange fees only and is expected to be followed by a more lasting cap in the future
Summary:
The UK’s Payment Systems Regulator (PSR) has proposed a new cap on cross-border interchange fees in an effort to protect UK businesses from overpaying when accepting payments from cards issued in the European Economic Area (EEA). The PSR’s calls follow fee increases by Visa and Mastercard, which raised interchange fees from 0.2% to 1.15% for debit cards and from 0.3% to 1.5% for credit cards. These fees, typically levied as a percentage of the total transaction value, have resulted in UK businesses paying an extra £150m to £200m last year. The PSR’s proposed cap would apply to outbound interchange fees only and is expected to be followed by a more lasting cap after further market analysis. The regulator plans to publish its final report on cross-border interchange fees in the first quarter of next year.
