Payments firms lose challenge against UK watchdog
Mastercard, Visa and British fintech Revolut have lost a legal challenge against Britain’s payments regulator over plans to introduce a cap on cross-border card fees. The ruling, delivered by the High Court in London, represents a significant victory for the Payments System Regulator and strengthens its authority to intervene in card payment pricing.
The case stemmed from a decision announced by the regulator in late 2024, when it said it would consult on whether to cap fees charged on transactions where European consumers make online purchases from UK-based businesses. Mastercard, Visa and Revolut jointly challenged the move, arguing that the regulator did not have the legal power to impose such price controls.
Court confirms regulator’s authority
The companies contended that the regulator was acting beyond its remit, particularly as the precise level and timing of any potential cap had not yet been determined. They warned that regulatory intervention could undermine competition and distort the economics of cross-border card payments.
However, the High Court rejected those arguments. Judge John Cavanagh ruled that the Payments System Regulator does have the authority to impose price caps on interchange fees if it deems them necessary. The judgment confirms that the regulator can proceed with its consultation and, if appropriate, introduce limits on fees charged for cross-border card transactions.
The regulator had previously expressed concerns that major card networks had increased fees to what it described as an unduly high level, particularly in the period following the UK’s exit from the European Union. According to the watchdog, these higher charges have increased costs for UK businesses selling online to customers in Europe, with knock-on effects for prices paid by consumers.
Industry concerns versus consumer protection
Payment firms have long argued that interchange fees help fund fraud prevention, innovation and the smooth operation of global card networks. Visa has previously said that imposing price caps could negatively affect the value that businesses and consumers receive from card payments, potentially limiting investment in security and new services.
Despite these concerns, the regulator maintains that its role is to ensure card payment costs remain fair and proportionate. Its managing director welcomed the court’s decision, saying it confirms the regulator’s powers to protect UK businesses and consumers from excessive fees. He added that the ruling enables the regulator to move forward with efforts to ensure cross-border interchange fees are set at an appropriate level.
The decision is particularly notable given that the British government has signaled its intention to abolish the Payments System Regulator as part of a broader push to reduce red tape and encourage economic growth. Even so, the ruling reinforces the regulator’s existing authority while it remains in operation and could influence how payment fees are regulated in the interim.
Implications for the payments market
The outcome of the case has potential implications across the payments industry. For merchants, especially small and medium-sized online retailers, a cap on cross-border card fees could reduce costs and improve margins when selling to European customers. For consumers, lower fees could eventually translate into lower prices or expanded online offerings.
For card networks and fintechs, the ruling adds regulatory uncertainty at a time when payment systems are already facing scrutiny over pricing, transparency and competition. While the exact structure of any fee cap has yet to be decided, the court’s judgment clears the way for the regulator to press ahead with its proposals.
As the consultation process continues, the debate is likely to intensify over how to balance innovation and investment in payments infrastructure with protections against excessive costs. The High Court’s decision signals that UK regulators retain significant powers to intervene when they believe market outcomes are no longer working in the interests of businesses and consumers.
Keywords: cross-border card fees, UK payments regulator, interchange fees, Mastercard, Visa, Revolut, High Court ruling, online payments, UK businesses, consumer protection
