- Mastercard and Visa are in the spotlight over a payments probe from the PSR
UK businesses are set to get more business from customers in the European Union (EU) under regulatory plans to cut up to £200million a year off interchange fees.
Cross-border interchange fees are charged to customers in the European single market when using credit and debit cards to buy online from UK businesses.
Some of these fees have been high since 2021, when Mastercard and Visa began raising them from 0.2 per cent to 1.15 per cent for debit cards and 0.3 per cent to 1.5 per cent for credit cards.
But now the Payment Systems Regulator (PSR) is consulting on plans to cut these fees. It estimates they add £150million to £200million a year onto the cost of European purchases of UK goods.
A PSR statement said: ‘The PSR finds that this was harmful to the interests of UK businesses and ultimately their customers.’
Continental costs: Higher interchange fees add to the cost of EU consumers buying UK goods
The PSR is consulting on whether it should cap these fees, and if so, at what level.
Any cap would be temporary, with a view to setting it at a more permanent level.
PSR managing director David Geale said: ‘Cards are a popular way we make payments in the UK.
‘Our findings confirm that, due to a lack of competition, Mastercard and Visa were able to raise cross-border interchange fees to an unduly high level, costing UK businesses hundreds of millions of pounds.
‘We consider that consulting on a range of options for capping prices is the best way forward to ensure UK businesses get a better deal.’
The PSR is collecting feedback on its consultation until 7 February 2025, and will reveal any plans for a price cap later next year.
A Visa spokesman said: ‘We continue to dispute the overall findings of the PSR and it will be important to ensure that any measures do not lead to uncertainty and unintended consequences.’
A Mastercard spokesman said: ‘Artificial controls on interchange 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 payment.’
