PSR Proposes Cap on Cross-Border Card Fees

The Payment Systems Regulator (PSR) in the UK has flagged significant competition concerns due to rising cross-border card fees. Following a detailed investigation, the PSR reports that these increased interchange fees, introduced by Mastercard and Visa, have been costing UK businesses an additional £150-200 million annually since 2021/2022.

The PSR suggests an interim cap on these fees to curb excess costs, with consultations opened to gather evidence from stakeholders on viable cap levels. Previously regulated caps on cross-border fees ceased post-Brexit, allowing Mastercard and Visa to elevate fees without effective competition restraints. These increases were found devoid of clear justification or benefits for businesses and consumers.

The consultation period extends to February 7th, 2025, with the PSR aiming to finalize a phased approach to pricing caps. This move seeks to ensure fair pricing and stimulate competition in the UK’s payment systems sector.