PSR decides not to proceed with interim cap on cross-border interchange fees

The Payment Systems Regulator (PSR) has decided not to proceed with an interim cap on cross-border interchange fees, saying it will instead develop a methodology for a longer-term price cap. The decision was published in October 2025 as part of its market review into cross-border interchange fees¹.

Cross-border interchange fees are paid by acquirers to issuers each time consumers use Mastercard or Visa debit or credit cards for online transactions between the UK and the European Economic Area¹. Following the UK's withdrawal from the EU at the end of 2020, the EU Interchange Fee Regulation no longer applied to UK domestic and cross-border transactions between the UK and the EEA, and the UK's own interchange fee regulation was introduced¹. Shortly afterwards, Mastercard and Visa raised interchange fees for card not present UK-EEA transactions using consumer debit and credit cards, from 0.2% and 0.3% to 1.15% and 1.5% respectively¹.

The PSR's final report found a lack of competition, with Mastercard and Visa not subject to effective competitive constraints, allowing them to increase fees to what the regulator called an unduly high level¹. It found the increases cost businesses £150 million to £200 million extra a year, and that it did not identify any justifications for them¹. The PSR focused on Mastercard and Visa, which it said account for 99% of debit and credit card payments in the UK¹.

The regulator had consulted on a two-stage price cap remedy, consisting of an interim cap in the short term followed by a longer-term cap after further analysis¹. It has now dropped the interim stage.

The PSR said its reasons are set out in more detail in a decision document, and that it has launched a consultation on the appropriate methodology, with an accompanying factsheet¹. The sources do not name the parties to the litigation or give a timetable for the longer-term cap.

Why it matters for households

Interchange fees are paid between banks and card schemes rather than directly by shoppers, but the PSR says the fees merchants pay to accept cards can ultimately affect the cost consumers pay for goods and services¹. The increases it examined apply to online transactions between the UK and the EEA using consumer debit and credit cards, and the PSR put the cost to businesses at £150 million to £200 million a year¹. With no interim cap, the fee levels set by Mastercard and Visa remain in place for now, and any longer-term cap depends on the PSR completing its methodology work. The PSR's remit covers the payments market, including card fees and fraud refunds, as set out in its role as the payments regulator.

What happens next

The PSR has launched a consultation on the methodology for developing a price cap remedy, alongside a factsheet¹. It has not reported a date for concluding that consultation or for deciding the level of any longer-term cap. Further material on the review sits within the regulator's regulation and policy work.