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Information requests from the PSR in relation to the EU Interchange Fee Regulation

Published 19 11 2015
Last updated 08 12 2015
Closes 03 12 2015

The Statutory Instrument giving the PSR powers to monitor and enforce compliance with the Interchange Fee Regulation (IFR) has been published.

The IFR will bring major changes to the way UK card payment systems operate.

Our powers will be in effect from 9 December 2015. To help us understand how we should apply our powers we need to gather some information from stakeholders before that date. The information we gather will help us understand whether or not any scheme(s) qualify for a temporary exemption from part of the IFR.

We have contacted American Express, Diners Club International, JCB International, MasterCard, UnionPay International and Visa Europe to gather information that will help us understand whether or not any scheme(s) qualify for a temporary exemption from part of the IFR.

In the interests of transparency, we are publishing the information requests so that all stakeholders have access to the same information.

Update: on 8 December 2015 we published our provisional determination of card schemes that are subject to domestic interchange fee caps in the UK.

Why are we doing this?

The PSR will be the lead UK regulator for the IFR which, amongst other things, sets interchange fee caps on card-based payment transactions within the UK and Europe. The interchange fee caps will apply from 9 December 2015.

The IFR gives some discretion to national governments. In the UK, the Government has decided to grant a time-limited exemption from domestic interchange fee caps to three-party schemes which:

  • operate with licensee issuers and/or acquirers; or
  • issue cards with a co-branding partner or through an agent.

To qualify for the exemption, the value of a scheme’s annual UK domestic transactions must be less than 3% of all card-based transactions in the UK. This means transactions where the issuer, acquirer and merchant are all located in the UK.

HM Treasury has asked the PSR to calculate the market share of those schemes that might benefit from an exemption. To do this, the PSR requires card schemes’ internal data on the value of UK domestic card-based payment transactions.

What do the information requests contain?

The information requests consist of:

  • a covering letter
  • an explanation of the methodology that the PSR intends to use when calculating market shares
  • one question, which asks each party to tell us the value of UK domestic card-based payment transactions under their scheme between 9 September 2014 and 8 September 2015

Who should respond and by when?

We are only seeking responses from American Express, Diners Club International, JCB International, MasterCard, UnionPay International and Visa Europe. These parties have already been contacted by us directly and have been asked to respond by 3 December 2015.

What happens next?

We will use the information we receive to calculate the market share of any scheme or schemes that might qualify for an exemption and communicate our provisional findings before the interchange fee caps take effect on 9 December.