Revolut, Mastercard, Visa lose legal battle on card fees cap
Revolut, Mastercard and Visa have lost a legal battle against the UK’s payments watchdog amid plans to introduce a cap on card fees for overseas transactions.
The trio of payment giants brought a judicial review to the High Court following a decision by the Payment Systems Regulator (PSR) in December 2024, confirming that it would consult on the fees cap.
These fees, which banks charge retailers to process payments, surged fivefold following the UK’s departure from the European Union, rising 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.
The payments watchdog had previously said fees were rising to an “unduly high level,” whilst firms have hit back, claiming the PSR did not have the power to introduce a cap.
However, High Court Judge John Cavanagh ruled on Thursday that the regulator, which merged with the Financial Conduct Authority (FCA) last year, has the authority to impose its proposed price caps on interchange fees. As a result, he dismissed the payment giant’s application.
David Geale, managing director of the PSR, said the decision “confirms our powers to ensure card payment costs are fair for UK businesses and consumers.
“This enables us to drive forward the work we have been doing to ensure cross-border interchange fees are set at an appropriate level.”
Mastercard and Visa scorned for hiking business costs
The ruling follows a review of fees last March, when the PSR issued a scathing statement about Visa and Mastercard.
The regulator said that the firms have raised core scheme processing fees by 25 per cent since 2017, costing UK businesses an extra £170m a year.
These hikes had piled pressure on businesses, forcing them to absorb additional costs or pass them on to customers, the PSR said.
Visa at the time said its fees reflect “the immense value that we provide to financial institutions, merchants and consumers”.
Meanwhile, Mastercard rejected the review’s finding, branding it as underplaying “the true competitiveness of the payment industry”.
Michelle Quinn, partner at Grosvenor Law, said: “If the proposed cap comes into effect, there is a clear line between the potential winners and the losers.”
Whilst retailers may be handed “some much needed breathing room,” for banks and fintechs it would mark a “squeeze” on a “meaningful revenue stream”.
The fresh ruling permits the regulator to plough forward with its public review, though it comes at a time when the UK government is pledging to “cut the red tape” and deregulate the City.
Chancellor Rachel Reeves folded the PSR into the FCA in a bid to streamline processes and minimise reporting burdens, as she vowed to “take out” more regulators in a bid to make it “easier to do business in Britain”.