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Revolut, Visa and Mastercard have failed in a High Court bid to block a proposed UK cap on cross-border card interchange fees.
UK cap on cross-border interchange fees
The decision hands a significant legal victory to the country’s payments watchdog at a politically sensitive moment for regulation.
The ruling confirms that the Payment Systems Regulator (PSR) is acting within its statutory powers by seeking to impose price controls on fees charged for international online card transactions — a move that could reshape revenues across Europe’s payments ecosystem.
Court upholds regulator’s authority
In a judgment delivered in London on Thursday, the court rejected claims by Revolut, Visa and Mastercard that the PSR had exceeded its remit.
The companies argued that fee caps would distort competition and undermine the economics of cross-border payments following Brexit.
The judge ruled that Parliament had granted the regulator sufficiently broad powers to intervene where fees appeared excessive, even though the precise level and implementation date of the cap have yet to be determined.
Fees surged after Brexit
The case centres on so-called “card-not-present” transactions, such as online purchases made by EU consumers from UK merchants.
After the UK left the European Union, Visa and Mastercard increased interchange fees sharply for these transactions.
According to the PSR, consumer debit card fees rose from 0.2 per cent to 1.15 per cent, while credit card fees increased from 0.3 per cent to 1.5 per cent.
The regulator estimates that these changes have cost UK businesses between £150m and £200m a year.
Although Visa and Mastercard do not directly collect interchange fees — which are paid to issuing banks — the court accepted the regulator’s argument that higher fees indirectly benefit the card networks by encouraging banks to prioritise their systems.
Industry backlash and political context
European banks and fintechs have strongly opposed the proposal, warning that a cap could leave them operating at a loss on each transaction.
Unlike traditional lenders, many fintechs rely heavily on payments revenue rather than interest income.
They also argue that payment processing costs have risen due to compliance requirements and the growing dominance of digital wallets such as Apple Pay and Google Pay.
The ruling comes as the UK government prepares to abolish the PSR and fold it into the Financial Conduct Authority, raising questions over how aggressively the cap will be pursued.
PSR managing director David Geale welcomed the decision, saying it confirmed the regulator’s ability to ensure that card payment costs remain fair for UK businesses and consumers.
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