Let us know about free updates
Revolut and Visa have filed legal challenges against the UK payment systems regulator, claiming that Watchdog has surpassed its authority in the proposed CAP of international digital transaction fees.
The move puts pressure on PSR as the government reviews the country’s regulatory environment to reduce red tape and promote growth. The regulator last year attracted rage from industry and politicians over controversial fraud rebate measures, promoting speculation that its authority could be curbed.
In 2023, PSR proposed a plan to cap the interchange fees charged by Visa and MasterCard on online cross-border payments after finding it has risen more than five times since Brexit.
The CAP was designed “to protect UK businesses from overpayment,” following complaints about the high fees charged by Visa and MasterCard to retailers, the PSR said at the time.
However, the proposal has sparked rage from European banks and fintechs, making money from fees. The Financial Times previously reported that the European Bank and Trade Organization told the Treasury earlier this year that CAPs would “lose money in each transaction” as CAPs were higher than the maximum fee allowed under CAPs.
London-based Revolut said on Friday that European groups applied for a judicial review of PSR’s plans. “We opposed the evaluation of the PSR and believe that we acted beyond our legal authority to impose these caps. Therefore, we requested the court to review and ultimately reversed the PSR decision.”
Visa said: “We respect the PSR’s role as an economic regulator. This narrow legal action focuses solely on the legal approval and process of PSR related to pricing, in order to ensure a fair and thorough process and to clarify the industry. This is important for future growth and investment in the UK.”
European banks and fintechs argue that processing payments have become more expensive since the UK left the EU, especially since the rise in digital wallets such as Apple Pay and Google Pay added costs.
Those familiar with the PSR idea believe they have the legal authority mentioned in the report, and added that judicial review is ready to robustly adhere to the decision.
