Mastercard, Visa Cross-Border Interchange Fees Too High, U.K. Regulator Provisionally Finds -- Update
December 13 2023 - 2:50AM
Dow Jones News
By Ian Walker
The U.K. Payment Systems Regulator said that it provisionally
plans to cap cross-border interchange fees on credit and debit
cards as it believes Mastercard and Visa have likely raised them
too high.
The regulator said Wednesday that it launched a review to see
whether the market was working after the companies raised some of
the fees in 2021 and 2022.
It added that Mastercard and Visa cards account for nine out of
10 online transactions at U.K. businesses using cards issued in the
European Economic Area, meaning that U.K. businesses have little
choice but to pay the increased costs.
It estimates U.K. businesses paid an extra 150 million pounds to
GBP200 million ($188.4 million to $251.3 million) due to the fee
increases.
The PSR said that the cap will protect U.K. businesses while it
seeks views on its provisional findings and a proposed approach to
remedies to help inform the final report.
"In this market review we have provisionally found that the fees
charged by Mastercard and Visa to U.K. businesses which accept
payments from within the EEA are likely too high. In short, at this
stage, we do not think this market is working well," PSR Managing
Director Chris Hemsley said.
The regulator has set a deadline of Jan. 31 for interested
parties to comment on its provisional findings, then plans to
publish its final report in the first quarter of next year.
It added that if the PSR concludes the market isn't working well
and it needs intervention, this report will be followed by a
consultation on the remedy package.
Visa said that it strongly disputes the findings and believes
the proposed remedies aren't justified.
"These interchange rates apply to less than 2% of U.K. card
payments, European (EEA) cardholders buying online from a U.K.
seller, and reflect the fact that these transactions are more
complex and carry far greater risk of fraud," a Visa spokesperson
said.
Mastercard wasn't immediately able to respond when approached
for comment.
Write to Ian Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
December 13, 2023 03:35 ET (08:35 GMT)
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