Guidance on the PSR’s approach as a competent authority for the EU Interchange Fee Regulation - June 2020

Important notice: This guidance has now been superseded by the updated version we published in September 2021. The new version reflects changes arising from the UK’s withdrawal from the European Union and other changes to the regulatory framework.

This is our revised guidance on how we will monitor and enforce the Interchange Fee Regulation (IFR) and replaces our original guidance published in 2016. 

The IFR is retained EU law that took effect on 8 June 2015 and brought major changes to the way card payment systems operate in Europe. 

The IFR mainly imposes requirements on payment card schemes and issuing and acquiring PSPs. Most notably, since 9 December 2015, it caps the interchange costs passed on to merchants processing card payments, therefore giving more certainty around interchange fees. 

Interchange fees are fees paid by the bank of a merchant (such as a supermarket) to the bank of a card user (such as somebody buying groceries) when a card payment is made. Interchange fees are one part of the total cost to the merchant of processing a card payment, which is known as a merchant service charge or MSC.  

In the UK, the PSR is the main competent authority for the monitoring and enforcement of the Interchange Fee Regulation (IFR), monitoring compliance with all provisions of the IFR including the caps and business rules. 

Following EU Withdrawal, the IFR is now retained UK law, which applies in the UK as amended by the Interchange Fee (Amendment) (EU Exit) Regulations 2019. Consumer cross-border card payments between the UK and EU (or any other third country), where either the acquirer or issuer is based outside the UK’s jurisdiction, are no longer subject to the interchange fee caps established under either UK IFR or EU IFR.  

The 2020 revisions to our IFR Guidance amend Chapter 7, so that it is consistent with our revised Powers and Procedures Guidance (PPG) where appropriate.