Mastercard, Visa and Revolut Lose UK Legal Challenge Over Card Fee Cap Plans

In a major regulatory development for the UK payments industry, Mastercard, Visa and fintech firm Revolut have lost a legal challenge at the High Court in London against the Payment Systems Regulator (PSR) over plans to introduce a cap on cross-border card fees charged when European consumers make online purchases from UK merchants. The decision clears the way for the regulator to design and implement interchange fee limits aimed at addressing what it views as unfair and excessive charges on cross-border payments.

The judgement represents a significant moment in the ongoing debate over how card payment fees should be regulated in the UK — particularly in the post-Brexit environment where previously applicable EU caps no longer apply to many cross-border transactions. It also highlights broader tensions between regulators seeking to protect consumers and merchants and payment networks defending commercial pricing flexibility.

Background: What Are Cross-Border Card Fees and Why They Matter

When a consumer uses a Mastercard, Visa, or similar card to make a purchase — especially from a business in another country — a fee is charged to process the transaction. This fee, known as the interchange fee, goes to the issuing bank, with card networks setting the broad pricing frameworks. These costs are often passed on indirectly or directly to merchants, and ultimately can influence consumer prices.

Prior to Brexit, the UK was covered by EU Interchange Fee Regulation which capped domestic and intra-EU fees on certain transactions. After the UK’s departure from the EU, these regulatory caps ceased to apply to many cross-border online transactions involving UK merchants and European consumers. According to the PSR, Mastercard and Visa raised relevant interchange fees significantly from 2021 to 2022 — for example, debit card fees reportedly climbed from around 0.2% to 1.15%, and credit card fees from 0.3% to 1.5% — prompting concerns over the cost burdens placed on businesses.

The PSR began consulting on possible remedies, including a cap on such fees, on the basis that competition in the cross-border payments market “was not working well” and UK businesses were paying up to £150 million–£200 million more annually because of fee increases.

The Legal Challenge and Court Ruling

In response to the PSR’s announcements and consultations, Mastercard, Visa and Revolut took their case to London’s High Court, seeking to block the regulator from imposing price caps. Their argument centred on the claim that the PSR did not have the statutory authority to set caps on interchange fees. They argued that such intervention would undermine competition and could negatively impact card payments’ value proposition for consumers and merchants alike.

However, on January 15, 2026, Judge John Cavanagh rejected the challenge, ruling that the PSR does indeed have the legal powers necessary to proceed with its fee-cap plans. The judgement confirmed that the regulator is entitled to design and potentially implement a regulatory framework that limits how much can be charged in cross-border interchange fees.

Importantly, the court did not set the specific fee levels or implementation timing — aspects which remain to be determined in the next steps of the regulatory process. But by defeating the challenge, the ruling removes a major legal obstacle that could have delayed or derailed the introduction of fee caps.

What the Decision Means for Payments, Merchants and Fintechs

For the Payments Ecosystem

The ruling signals that the UK regulator has strong legal footing to push ahead with fee-capping reforms. This could reshape the economics of online commerce payments between UK vendors and European buyers — a significant volume of trade in the digital age. Limiting interchange fees may help small and medium-sized merchants reduce overheads and potentially pass savings on to customers.

The PSR’s managing director welcomed the judgement as confirmation that the regulator can “ensure card payment costs are fair for UK businesses and consumers,” and that it enables the PSR to continue work on identifying appropriate caps based on market data and consultations.

For Consumers

Consumers could benefit indirectly if fee caps lead merchants to reduce prices or lower the cost of doing business. However, the impact on consumer pricing is likely to depend on how merchants factor in savings and whether cap implementation delays shift cost burdens elsewhere.

At the same time, card providers have argued that overly restrictive fee caps could reduce the “value” of card services — for example by making it harder to subsidise rewards programmes or maintain investment in security and fraud protection. Visa warned previously that price caps might negatively affect the benefits users receive from card payment systems.

For Banks and Fintechs

Banks, acquirers and fintechs like Revolut that derive revenue from interchange fees have expressed concerns that caps could squeeze margins. Cap restrictions could force business model adjustments or encourage firms to explore alternative revenue streams, potentially reshaping competitive dynamics in the UK and cross-border payment markets.

Revolut and Visa both declined to comment immediately after the ruling, while Mastercard did not respond publicly.

Where the Fee Cap Process Goes Next

With the legal hurdle cleared, the PSR is expected to continue refining its proposed methodology and options for a cap. This involves analysing market feedback, modelling potential fee levels, and considering the effects of any cap on competition, service quality and payment system stability.

It is also worth noting that the overarching payment landscape in the UK is undergoing broader regulatory evolution — for instance, the PSR may eventually be merged into the Financial Conduct Authority (FCA) as part of reforms to the UK’s financial regulatory framework.

The regulator has yet to publish the final cap levels and an implementation timeline. When that occurs, stakeholders including merchants, card networks, banks, fintechs and consumer groups will have a clearer view of how the reform unfolds in practice.

Broader Context: Regulation and Market Trends in Payments

This ruling is part of a wider global trend toward increased scrutiny of payment fees and transparency in pricing. Governments and regulators in major economies are reassessing how fees are set, how competitive payment markets are functioning, and how costs are distributed among issuers, merchants and consumers.

Policy Shifts

Post-Brexit regulatory divergence has left the UK with its own framework for tackling interchange fees, distinct from the EU’s Interchange Fee Regulation. The PSR’s actions reflect an effort to tailor regulation to UK market conditions while protecting businesses and competition.

Payment Innovation and Competition

At the same time, innovations — such as digital wallets, fintech-driven payment rails, and new cross-border solutions — continue to reshape the payment landscape. Regulators globally are balancing support for innovation with safeguards against excessive fees, unfair practices or weak competition.

Conclusion

The decision by the UK High Court to reject the legal challenge mounted by Mastercard, Visa and Revolut over planned caps on cross-border interchange fees is a pivotal moment in UK payments regulation. By affirming the legal authority of the Payment Systems Regulator, the judgement paves the way for potential fee limits aimed at reducing costs for UK merchants and consumers — a key policy priority after years of rising fees since Brexit.

While the exact contours of the fee cap remain to be fleshed out, the ruling underscores regulators’ willingness to intervene in payment markets to address perceived imbalances. It also highlights the evolving regulatory landscape facing banks, card networks and fintechs as they navigate competitive and compliance pressures in a rapidly changing global market.

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