LONDON: Britain’s payments regulator on Wednesday provisionally proposed a cap on cross-border interchange fees charged by Mastercard and Visa on transactions made between the UK and European single market.
The Payment Systems Regulator (PSR) said a cap would protect businesses from overpaying, after it published interim findings of a market review on interchange fees charged since Brexit, when the bloc’s payments rules ceased to apply in Britain.
The PSR said the review focused on charges set by Mastercard and Visa, as they account for 99% of debit and credit card payments in the UK.
The watchdog said both firms had likely raised fees to an “unduly high level”, costing UK businesses and extra 150-200 million pounds due to fee increases.
Under the proposals, the PSR would impose an initial time-limited cap of 0.2% on UK-European Economic Area debit transactions and 0.3% on credit transactions. A lasting cap would then be imposed once further analysis is carried out.
A spokesperson for Visa said the company strongly disputed the findings of the PSR’s interim report and said the proposed remedies were “not justified”.
“Accepting reliable, secure, and innovative digital payments represents enormous value to UK businesses, especially when selling overseas,” the spokesperson said.
“These interchange rates apply to less than 2% of UK card payments – European (EEA) cardholders buying online from a UK seller – and reflect the fact that these transactions are more complex and carry far greater risk of fraud.”
Mastercard did not immeditately respond to a request for comment.
The PSR is inviting feedback on the proposals until the end of January.
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