Visa, Mastercard and Revolut Lose UK Battle Over Interchange Fees

Visa, Mastercard and Revolut lost a fight over a proposed transaction fee cap in the United Kingdom.

The High Court in London ruled Thursday (Jan. 15) that the U.K.’s Payment Systems Regulator (PSR) has the right to set a price cap for cross-border interchange fees, the Financial Times (FT) reported Thursday.

The ruling came despite lobbying from European banks and FinTechs, the report said. Visa and Revolut filed a judicial review last year against the PSR, contending the regulator had overstepped its authority and was hurting competition.

Neither Visa nor Mastercard responded to PYMNTS’ request for comment. A spokesperson for Revolut declined to comment.

The PSR first proposed the cap in 2023 after seeing that interchange fees for cross-border online payments had increased more than fivefold since Brexit, the FT report said.

The fees are levied when a consumer from one country buys something from a merchant in another. The dispute was centered on card-not-present transactions, like online purchases, according to the report.

The PSR’s findings showed that Visa and Mastercard increased interchange fees for online transactions between the European Union and the U.K. to 1.15% for debit cards and 1.5% for credit cards from 2021 to 2022, the report said.

“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.”

Visa has said it disagrees with the PSR’s findings. A spokesperson for Mastercard told PYMNTS in 2024 that “artificial controls” on the interchange fees “do not reflect the commercial reality of today’s market and, if not set at the right level, can negatively impact the value people and businesses receive from card payments.”

Mastercard and Visa do not collect interchange fees but rather serve as intermediaries in transactions, the FT report said. But the High Court’s judgement said both companies are indirectly impacted by price caps because these fees offer an incentive for banks to use their services.

The court’s judgment came days after President Donald Trump’s call to cap credit card interest rates at 10% led to pushback from the banking and payments sector.