An investigation was launched four years ago after the issue was found during routine monitoring, the PSR said. Banks had erroneously charged numerous cards as being commercial when they were actually consumer cards and should have been subjected to a cap, the regulator said.
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“The interchange fee caps were put in place to reduce the cost of accepting customer card payments for shops and other merchants’ businesses. The banks broke the rules by failing to bring themselves in line with the caps,” Chris Hemsley, Managing Director of the PSR, said in a press release on Thursday (May 12).
Hemsley added that as soon as the agency noticed the issue, it “stepped in to make sure the banks put a stop to it.” Fees were reimbursed to customers and fines were levied by the PSR.
“As demonstrated in this case, we will intervene and take robust action where needed to ensure compliance, including with the Interchange Fee Regulation (IFR),” Hemsley said.
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Because the banks agreed to settle early, they qualified for a 30% discount. Without the discount, the PSR would have levied a financial penalty of £2.6 million ($2.7 million) on the banks, per the release.
Read more: Interchange Fees Back in US Antitrust Spotlight Post Amazon UK Visa Card Ban Reversal
Earlier this year, the Merchants Payments Coalition in the U.S. sent a letter to the Federal Trade Commission (FTC) and the Department of Justice (DOJ) urging the agencies to look into credit card fees.
The coalition pointed to the U.K., where merchants are charged an average 0.55% of the transaction amount for purchases made with Visa credit cards totaling $369 million in 2020. In the U.S., fees are 2.22% of transactions, totaling over $43 billion in 2020.
