Revolut and Visa Challenge UK Proposal to Cap Interchange Fees

Revolut and Visa reportedly filed legal challenges against the U.K.’s Payment Systems Regulator (PSR), seeking to overturn the regulator’s proposed cap on interchange fees on cross-border online payments.

The two companies argue that the regulator overstepped its powers with the plan it proposed in 2023, the Financial Times (FT) reported Friday (March 7).

Revolut told the FT, per the report: “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.”

Visa said in the report: “We respect the PSR’s role as an economic regulator. This narrow legal action is focused only on the PSR’s legal authorization and process related to price setting to ensure a fair and thorough process, and give clarity to the industry. This is critical to future growth and investment in the U.K.”

When the PSR announced its proposal to cap interchange fees on cross-border online payments, it said that after the U.K. left the European Union, both Visa and Mastercard raised interchange fees for online transactions between the EU and the U.K. to 1.15% for debit cards and 1.5% for credit cards, saying the hike was needed to contend with fraud and increased competition.

“In this market review we have provisionally found that the fees charged by Mastercard and Visa to U.K. businesses which accept payments from within the EEA are likely too high,” Chris Hemsley, who was the PSR’s managing director at the time, said in a Dec. 13, 2023, press release. “In short, at this stage, we do not think this market is working well.”

A Mastercard spokesperson provided a statement at the time saying the company did not agree with the PSR’s conclusions, and would “continue to educate them” on the importance of electronic payments to England’s economy.

Visa also disputed the PSR’s findings, saying in a statement provided to PYMNTS: “Accepting reliable, secure and innovative digital payments represents enormous value to U.K. businesses, especially when selling overseas.”

Friday’s FT report said the legal challenges came at a time when the PSR is being pressured by the government’s efforts to cut red tape and boost growth.