On 13 December 2023, the Payment Systems Regulator (PSR) published an interim report (MR22/2.6) for its market review into UK-EEA consumer cross-border interchange fees. It is now seeking views on the provisional findings and proposed approach to remedies, which are set out in the report, to help inform its final report.
In the interim report, the PSR proposes to introduce a price cap aimed at protecting UK businesses from overpaying on these interchange fees. Subject to its final report and further consultation on remedies, the PSR explains that this could happen in two stages:
- An initial time-limited cap of 0.2% for EEA consumer debit transactions and 0.3% for consumer credit transactions (where the transactions are made online at UK businesses).
- A lasting cap on these interchange fees in the future, once further analysis has been carried out to establish an appropriate level.
The PSR is proposing this action after it examined the level of UK-EEA cross-border interchange fees being charged for online retail transactions with UK businesses, in order to understand whether they, or other factors, indicate the market is not working well. The PSR has set out its provisional concerns that the fees charged by debit and credit card providers to UK businesses which accept payments from within the EEA are likely to be too high, after they were increased significantly in 2021 and 2022.
Anyone with an interest in online retail payments between the UK and EU (particularly issuers, acquirers, card scheme operators, businesses and cardholders) is invited to provide feedback on the PSR’s provisional findings and proposed approach to remedies. The deadline for providing feedback is 31 January 2024.
The PSR plans to publish its final report on cross-border interchange fees in Q1 2024, but it will confirm timing in due course. If it concludes that the market is not working well and warrants intervention, the final report will be followed by a consultation on the remedy package.