- The UK’s Payment Systems Regulator (PSR) proposes a new cap on cross-border interchange fees.
- Visa and Mastercard, responsible for 90% of online transactions with EEA-issued cards, increased fees from 0.2% to 1.15% for debit cards and 0.3% to 1.5% for credit cards in 2021-2022.
- Visa and Mastercard defended fee hikes, citing increased fraud risk in cross-border transactions; emphasizing they don’t directly benefit from the fees.
- EU’s Interchange Fee Regulation historically capped interchange fees, but this protection doesn’t apply to UK-EEA transactions post-Brexit.
- After a three-year review, the PSR proposes an initial time-limited cap of 0.2% for debit and 0.3% for credit transactions made online.
- UK businesses may have paid an extra £150-£200 million due to fee increases; PSR aims to ensure the market functions well.
- The PSR is accepting feedback until January 31, with a final report on cross-border interchange fees expected in the first quarter of next year.
