The Payment Systems Regulator (PSR) has published a statement on card schemes subject to domestic interchange fee caps in the UK in 2017/18.
The PSR explains that the Interchange Fee Regulation (IFR) gives some discretion to national governments to grant a time-limited exemption from domestic interchange fee caps to certain three-party card schemes. The UK is exercising this discretion.
The PSR is responsible for determining if exemptible three-party card schemes qualify for an exemption from the domestic interchange fee caps. At present, American Express is the only card scheme operating in the UK that could qualify.
To qualify for the exemption, the value of an exemptible three-party card scheme’s annual UK card-based payment transactions must be less than 3% of the annual value of all card-based payment transactions made in the UK.
The PSR has confirmed that the value of American Express’ annual UK card-based payment transactions in 2016 was above 3% of the annual value of all card-based payment transactions made in the UK. Therefore, American Express and the payment service providers participating in its scheme are subject to the interchange fee caps on UK domestic transactions from 1 April 2017 to 31 March 2018. The interchange fee caps do not apply to transactions where American Express is both the card-issuer and the acquirer.