UK Court Supports Regulator in Cap on Cross-Border Card Fees

A UK High Court judge has ruled in favor of the Payment Systems Regulator (PSR), allowing it to proceed with plans to cap cross-border transaction fees on card payments between the UK and Europe. This decision marks a setback for Mastercard, Visa, and Revolut, who had challenged the regulator’s authority to impose such caps. The case was closely watched due to its implications for the cost of online payments post-Brexit.

The legal dispute arose after the PSR announced in December 2024 its intention to restore caps on cross-border interchange fees. These fees are applied when EU consumers use cards to purchase goods from UK merchants. The PSR argued that these fees had surged to “unduly high” levels following Brexit. Before Brexit, EU regulations had limited these fees, but those restrictions no longer apply to UK-EU transactions.

In response, Mastercard, Visa, and Revolut brought the case to London’s High Court. They contended that the PSR lacked the legal authority to enforce pricing caps on these fees and questioned the regulator’s process, which had not yet finalized the cap levels or their implementation timeline.

However, Judge John Cavanagh dismissed the companies’ objections, affirming the PSR’s power to set limits on cross-border interchange fees. This ruling clears the way for the PSR to continue its work on designing the cap, though the exact rates and enforcement dates remain to be determined. According to the PSR, recent fee hikes have increased costs for UK merchants when European customers shop online, which the regulator sees as detrimental to competition.

David Geale, the managing director of the PSR, welcomed the judgment, stating it affirms the regulator’s mandate to ensure fair card payment costs for UK businesses and consumers.

Industry reactions have been mixed. Visa had previously expressed disagreement with the PSR’s assessment, warning that imposing price caps could reduce the value of card payments for users and businesses alike.

This case is not occurring in isolation. In the United States, Visa and Mastercard have been embroiled in a long-standing legal battle over interchange fees. Last year, the two companies proposed a $38 billion settlement to settle claims that they had colluded to charge merchants excessively high “swipe fees.” This proposal came after U.S. District Judge Margo Brodie rejected a previous $30 billion settlement offer, describing it as inadequate given the magnitude of the fees involved.

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The next steps in the UK involve continued deliberations by the PSR on the specifics of the interchange fee cap. The regulator’s decision on the rate and timing remains pending, and industry participants are likely to closely monitor the developments. No official responses from Mastercard, Visa, or Revolut have been issued following the court’s decision.