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Market review into cross-border interchange fees

Last updated: December 2023

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 are focussing on the charges set by Mastercard and Visa – who account for 99% of debit and credit card payments in the UK. In our final terms of reference, we set out what we will assess in the review, which will then inform any decisions on the steps we might need to take to promote effective competition or to address any harm. Most recently, we have published a working paper that sets out our initial thinking on the impact of fee increases, how UK card users may have been harmed and how the impact of increases can be mitigated.

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

Documents

Press releases and announcements