More than ten years after the capping of interchange fees in the European Union, the question of further regulation is becoming pressing. In the United Kingdom, the Payment Systems Regulator (PSR) is examining the evolution of scheme and processing fees charged by Visa and Mastercard through a distinctive approach that deserves consideration for the regulation of card payments on the continent.
What the EU’s IFR changed regarding interchange fees
At a global level, interchange fees are set by card networks and, therefore, differ across card schemes and payment products. Within the European Economic Area (EEA) specifically, the Interchange Fee Regulation (IFR), which was introduced in June 2015, harmonised these fees by imposing caps of 0.2% on consumer debit card transactions and 0.3% on consumer credit card transactions. The objective was to reduce merchants’ payment acceptance costs, promote a more efficient Single Market for payments, and ultimately deliver benefits to consumers through lower prices and broader payment choice.
The IFR also included a review clause, requiring the European Commission to assess its effects on the market. That review found merchant costs linked to interchange had fallen significantly, but it did not recommend extending the caps to commercial cards, and it left largely untouched the fees schemes charge for scheme membership, network access, and processing (categories outside the IFR’s scope entirely, whatever the card type). For the last decade, this combination closed the door on further interchange-style intervention.
The PSR opening a new chapter
Recently, the UK’s Payment Systems Regulator (PSR) has reopened the broader debate. Its March 2025 final report on card scheme and processing fees found that Visa and Mastercard are subject to ineffective competitive constraints on the acquiring side, do not give acquirers sufficiently clear information about their fees, and have raised those fees substantially in recent years without evidence that the increases reflected cost analysis, competition, or innovation (1).
Yet, the PSR has not proposed an immediate cap. Citing the limits of its current evidence and the complexity of the fee structure (2), it concluded a pricing remedy would be premature at this stage. Instead, it has chosen a more targeted first step: closing the information gap. Under its proposed Regulatory Financial Reporting (RFR) remedy, Visa and Mastercard would be required to provide detailed financial reporting on their UK card operations, including dedicated profit-and-loss accounts, breakdowns by products, services and customer groups, as well as information on pricing methodologies and profitability drivers.
The data behind this proposal hints at why the focus is shifting. The PSR’s analysis shows that average scheme and processing fees charged to acquirers, as a share of transaction value, increased by at least 25% between 2017 and 2023 (3). Moreover, Visa and Mastercard together accounted for over 95% of all UK card payments by value in 2021 (4). Therefore, even as one part of the fee stack was fixed by regulation, another part kept moving. Part of the problem is that the schemes don’t report UK profitability on a standalone basis, and they use different (and sometimes inconsistent) cost allocation approaches, including Mastercard’s exclusion of FX conversion income and Visa’s inclusion of costs that constitute intercompany profits for the wider Visa group (5). The RFR remedy is essentially an attempt to close this information gap before deciding what, if anything, comes next.
From interchange fees to scheme fees, processing fees, and other network charges
The PSR’s initiative reflects a broader evolution in regulatory thinking. For years, debate around card costs centred on interchange. Today, many merchants report that scheme fees and processing fees are among the fastest-growing components of their card acceptance costs. Unlike interchange, these fees are often fragmented, subject to frequent revisions, and more difficult to understand and analyse.
The UK’s review suggests regulators are beginning to recognise that controlling one layer of the fee stack may not be enough if costs continue to move somewhere else. The PSR’s broader package of remedies also includes measures focused on transparency, fee complexity, and pricing governance. The objective is to understand profitability while also improving visibility into how fees are structured and communicated to market participants. For the payments industry in Europe, this could represent the beginning of a more comprehensive analysis of card network economics.
Commercial cards as a sensitive issue for merchants
Any discussion about the future regulation of card fees should also include commercial cards. Unlike consumer cards, commercial and corporate card interchange fees largely fall outside the scope of the IFR caps. As a result, they can generate higher acceptance costs for merchants. For many businesses, this creates a visibility problem. Acquirer reporting does not always provide a granular breakdown between consumer and commercial card transactions. Therefore, merchants may struggle to understand how much of their card acceptance cost is being driven by commercial card usage. This matters because commercial cards have become increasingly important, especially in sectors such as travel, hospitality, and B2B payments.
The PSR’s new reporting framework requires card schemes to break down UK card revenues not only by debit, credit, prepaid, domestic, intra-Europe, and international categories, but explicitly by “consumer vs commercial segments” (6) – an acknowledgement that this split, currently not visible, is relevant. Yet, the PSR has also decided to drop its earlier plan to collect acquirer-level fee data (7), which suggests that the link between scheme-level profitability and what individual merchants pay remains outside the reporting net for now.
The implications for large merchants and corporates
The PSR’s consultation is ultimately about transparency rather than price intervention, and it may indicate where future regulation might head towards. For large merchants and corporates, the immediate implication is clear: it is vital to understand card acceptance costs. Therefore, rather than focusing solely on interchange, which is capped and stable, organisations should seek to have more visibility into scheme fees, processing fees, and commercial card costs. This means paying more attention to acquirer statements, demanding better reporting granularity, and identifying where commercial card acceptance is contributing disproportionately to costs.
At the same time, compliance, treasury, and payments teams should closely monitor regulatory developments in the UK and the EU, and pay attention to the schemes’ regulatory financial statements (RFS) for the years 2023 to 2026, which will be submitted in 2027 (8). These will ultimately be the true test of regulator’s willingness to act on the fee stack.
Sources:
1. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 4
2. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 12
3. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 31
4. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 30
5. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 8
6. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 17
7. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 10
8. PSR, Consultation paper: Market review of card scheme and processing fees – Proposed direction and guidelines: regulatory financial reporting, May 2026, page 7