Revolut and Visa have launched legal challenges against the UK’s Payment Systems Regulator (PSR) in an effort to overturn a proposed cap on interchange fees for cross-border online payments. The companies argue that the PSR has exceeded its authority with the plan it introduced in 2023, according to a report from the Financial Times (FT) on March 7, 2024.
Revolut and Visa Push Back Against PSR’s Authority
Revolut expressed strong opposition to the PSR’s decision, stating: “We disagree with the PSR’s assessment and believe it has acted beyond its statutory powers in imposing these caps. We have therefore requested the court to review and ultimately overturn the PSR’s decision.”
Visa echoed this sentiment, emphasizing the importance of fair regulatory practices. A Visa spokesperson stated: “We respect the PSR’s role as an economic regulator. This narrow legal action is focused only on the PSR’s legal authorization and process related to price setting to ensure a fair and thorough process, and give clarity to the industry. This is critical to future growth and investment in the UK.”
UK’s Payment Regulator Aims to Curb Interchange Fee Hikes
The PSR first proposed the cap on interchange fees after observing significant fee increases following the UK’s departure from the European Union. Both Visa and Mastercard raised interchange fees for online transactions between the EU and UK to 1.15% for debit card transactions and 1.5% for credit cards, citing concerns over fraud and growing competition.
Chris Hemsley, PSR’s former managing director, commented in a December 13, 2023, press release:“In this market review, we have provisionally found that the fees charged by Mastercard and Visa to UK businesses which accept payments from within the EEA are likely too high. In short, at this stage, we do not think this market is working well.”
Mastercard and Visa Defend Their Pricing Strategies
Mastercard has publicly disagreed with the PSR’s findings, asserting that electronic payments are essential to the UK’s economic growth. A spokesperson from Mastercard stated that the company “will continue to educate [the PSR] on the importance of electronic payments to England’s economy.”
Visa also pushed back against the regulator’s claims, emphasizing that digital payments provide substantial benefits to UK businesses, particularly in international trade. A Visa representative stated: “Accepting reliable, secure, and innovative digital payments represents enormous value to UK businesses, especially when selling overseas.”
Regulatory Pressure and Government Oversight
The legal dispute comes at a time when the UK government is focusing on reducing regulatory barriers and promoting economic growth. With the PSR under pressure to streamline regulations, the outcome of this case could have a significant impact on the future of digital payments and interchange fee structures in the UK.
