Last updated: December 2024

Cards are the most popular way for consumers to make a payment. To accept card payments, merchants must pay certain fees which can ultimately impact the cost we all pay for goods and services. We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.

Cross border interchange fees are paid by acquirers to issuers every time consumers use Mastercard or Visa debit or credit cards for online transactions between the UK and the European Economic Area (EEA).

Following the UK’s withdrawal from the EU at the end of 2020, the EU IFR no longer applies to UK domestic and cross-border transactions between the UK and EEA. This led to the UK IFR being introduced. Shortly after the EU withdrawal, Mastercard and Visa increased 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% respectively. The PSR wants to understand the rationale behind these increases, whether they are an indication that the market is not working well, and any potential impacts of these increases.

We focussed on the charges set by Mastercard and Visa – who account for 99% of debit and credit card payments in the UK - and have now published our final report that has found: 

  • A lack of competition: Mastercard and Visa were not subject to effective competitive constraints, allowing them to increase their fees to an unduly high level. 

  • Costly increases: Mastercard and Visa raised their fees without regard to the potential impacts on or interests of businesses and their customers. The PSR found that the increases are costing businesses £150-200 million extra annually.  

  • Unclear rationale: The PSR did not identify any justifications for the increases. Mastercard and Visa were not able to show that they undertook any specific assessment when deciding to increase their fees and the PSR has seen no evidence that the pre-increase fee levels were not working.  

As a consequence of this, the PSR is now carrying out a consultation into a potential two stage price cap remedy to address these issues and protect businesses, consisting of an interim cap in the short term, followed by a longer-term cap after the PSR has carried out further analysis.  

You can find the latest announcements and publications related to the market review below: 

Documents

Press releases and announcements