Revolut and Visa Take Legal Action Against PSR’s Fee Cap Plan: A Financial Showdown
In a significant move impacting the UK e-commerce landscape, the Payment Systems Regulator (PSR) has initiated plans to impose a price cap on the interchange fees that Visa and Mastercard charge UK merchants for online transactions made by European customers. This decision comes in response to substantial fee hikes observed in recent years, raising concerns among businesses.
Background on Interchange Fees
In 2021 and 2022, both Mastercard and Visa escalated their cross-border interchange fees dramatically. The PSR reported that these fees increased from:
- 0.2% to 1.15% for debit card transactions
- 0.3% to 1.5% for credit card transactions
This surge in fees, attributed to post-Brexit conditions, is estimated to cost UK businesses an additional £150-200 million annually.
Industry Response
In light of these developments, key players in the financial sector are voicing their opposition. Notably, Revolut has sought a judicial review of the PSR’s plan, as reported by the Financial Times.
The fintech company expressed its disagreement with the PSR’s assessment, 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’s Stance
Meanwhile, Visa has acknowledged the PSR’s regulatory role, emphasizing that their legal challenge is not about opposing the regulator’s authority but ensuring a fair and transparent process:
“We respect the PSR’s role as an economic regulator. This narrow legal action is focused only on the PSR’s legal authorisation 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.”
PSR’s Defense Strategy
In response to the backlash, the PSR has committed to defending its decision “robustly,” according to sources familiar with the situation. The regulator has also indicated that it plans to address the significant increases in processing fees for domestic payments.
For more information on the implications of this regulatory move, you can visit the PSR’s official site for updates and details.
