UK Court Clears the Way for Caps on Cross-border Card Fees

The High Court in London recently ruled that the UK’s Payment Systems Regulator (PSR) has the legal authority to impose cross-border interchange fees—rejecting a challenge backed by Visa, MasterCard, and Revolut.

According to Reuters, the three companies sought a judicial review after the regulator said it was considering capping fees for card transactions between the EEA and the UK.

Both Visa and MasterCard previously increased their interchange fees for online transactions in 2021 and 2022, where debit card fees rose from 0.2% to 1.15% and credit card fees from 0.3% to 1.5%. The PSR is now determining the level and timing for the fee caps, which are estimated to have cost British businesses and consumers an additional £150 to £200 million in transaction fees since Brexit.

While the ruling will come as good news to businesses and consumers, its implications are relevant in the global sphere as well—particularly for the fintech sector, where transaction fees and interchange-linked economics are central to many business models. With regulators showing increasing willingness to treat pricing power in payment networks as a competition and fairness issue, there’s a risk that fee caps will reduce the per-transaction profit margins for payment and transaction fintechs.

Fintechs like neobanks and those involved in global money transfers will be among the most impacted by the ruling and others like it. With these markets already experiencing significant saturation while trying to attract new customers with ever-lower transaction fees, regulator-imposed caps could drive down revenue potential even further.

For fintechs that make their profits from cross-border payments, it has never been more important to stress-change interchange sensitivity by modelling revenue potential under various fee cap scenarios. However, this alone may not be enough to remain profitable in the long term. Low fees in cross-border have become a staple of modern global commerce—they’re now the standard rather than the exception. That means low fees are no longer a viable long-term value proposition by themselves.

To stay profitable, fintechs will need to diversify their monetization strategies and reduce reliance on transaction fees. Possibilities include offering value-added merchant services, supporting alternative payment methods like account-to-account, or expanding into higher-margin financial products like embedded finance and lending. Service quality and tooling will also help fintechs improve their value narratives in an industry where low-fee cross-border payments are now the norm and the expectation.