We are consulting on proposed amendments to our Guidance on the Interchange Fee Regulation (IFR) following the UK’s withdrawal from the European Union and changes to the regulatory framework.
What is the IFR?
The new UK IFR originated from European Union (EU) legislation that took effect on 8 June 2015 and brought major changes to the way card schemes (such as Visa and Mastercard) operate, most notably by introducing a cap on certain interchange fees applicable to payment cards. The IFR mainly imposes requirements on payment card schemes and issuing and acquiring PSPs.
Following EU Withdrawal, the IFR is now retained EU law, which applies in the UK as amended by the Interchange Fee (Amendment) (EU Exit) Regulations 2019 (the ‘UK IFR’). 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.
Why are we publishing this consultation?
In 2016 we published our Guidance on the PSR’s approach as a competent authority for the EU Interchange Fee Regulation, setting out how we monitor and enforce the EU Interchange Fee Regulation (EU IFR, 2015). It introduced caps on interchange fees for certain card transactions, and business rules governing parties’ activities. The Guidance was updated in 2020 so that it is consistent with our revised Powers and Procedures Guidance where appropriate.
We are proposing amendments to our Guidance on the Interchange Fee Regulation, to reflect legislative changes resulting from the UK leaving the EU. These changes include:
- the conversion of EU legislation into domestic legislation
- amendments to ensure the legislation operated effectively after EU exit, often referred to as ‘onshoring’
We also propose to update the Guidance to reflect a small number of changes to the regulatory framework.
What this document contains
The UK IFR makes provisions for how card schemes, issuers and acquirers must operate in the UK. Our proposed amendments to the Guidance reflect the principal differences between the EU IFR and the UK IFR, including the different scope of the UK IFR, and the replacement of the Regulatory Technical Standards (RTS) Regulation.
Our proposed amendments to the Guidance also reflect other changes since we first published it in 2016, which include the removal of Chapter 4 in its entirety, removing references to weighted average interchange fees and amending references to the rules on surcharging in the UK.
Who should read this consultation?
This consultation is likely to be of interest to card scheme operators subject to the UK IFR, parties contracting with card schemes and/or processing entities (for example, issuers and acquirers), third-party card payment processors and merchants that accept card payments.
Have your say and next steps
We welcome your comments on our proposed amendments to the Guidance by 5pm Friday 21 May 2021.
You can email your comments and responses to us at IFRcompliance@psr.org.uk, or write to as us at:
IFR Guidance review
Payment Systems Regulator
12 Endeavour Square
Please provide your response in a Word document (rather than, or as well as, a PDF).
Once the consultation has closed, we will consider and assess all responses. Later in 2021, we will publish the final, updated Guidance.
CP21/5: Annex 2
pdf | 2 MB