Laura WilesThe PSR has decided that it will not proceed with implementing an interim cap on cross-border interchange fees.
The decision follows a December 2024 market review into UK-EEA cross-border interchange fees which concluded that a price cap was the only effective remedy to mitigate harm to merchants and their customers as a result of post-Brexit increases in fees, and a February 2025 consultation on remedies which sought views on whether to impose an initial, interim cap during work to determine the appropriate level for interchange fees.
After the launch of the consultation, Mastercard, Visa and Revolut sought judicial review of the proposals. The PSR subsequently paused work on the interim cap in March 2025, and have now decided that it would be more effective to proceed with a cap only after developing a robust methodology and analysis to determine an appropriate level for the fees.
The PSR is now consulting on its proposed methodology for identifying this appropriate level of fees. In short, it intends to use the merchant indifferent test as a starting point. The test questions whether a merchant would refuse a card payment if it were certain that a customer about to pay at the cash register had an alternative means of payment, and is passed if accepting the card does not increase the merchant’s operating costs, there making it indifferent as to payment method.
Based on the results of the test, evidence on the impact of interchange fees on issuers’ incentives and evidence on competition between payment methods, the PSR will reach a view on the appropriate cap.
The consultation closes on 21 November 2025.