A UK court has dismissed challenges by Mastercard and Revolut against a proposed cap on interchange fees for card transactions, clearing the way for regulatory action. The decision impacts major payment processors and fintech firms across Europe.
- UK court dismissed Mastercard and Revolut's legal challenge against a proposed 0.2% interchange fee cap
- Interchange fees currently average 0.7% to 1.5% and cost UK merchants £2.3 billion annually
- The cap could save UK merchants up to £1.1 billion per year by 2027
- Regulatory action clears path for implementation by 2027, despite industry opposition
- The decision may influence EU-level payment regulations under review by the European Commission
- Fintechs and banks now reassess revenue models, including rewards and merchant services
The UK’s Competition Appeal Tribunal ruled on January 15, 2026, that Mastercard and Revolut failed to prove the proposed interchange fee cap would cause disproportionate harm to their operations. The ruling follows a legal challenge against the Payment Systems Regulator’s (PSR) plan to limit interchange fees to 0.2% for most card transactions by 2027. The cap, initially proposed in 2024, aims to reduce costs for merchants and improve competition in payments infrastructure. The decision marks a significant regulatory win for the PSR, which has argued that current interchange fees—often averaging 0.7% to 1.5%—create an unfair burden on small and medium-sized businesses. Industry data shows that UK merchants paid approximately £2.3 billion in interchange fees in 2023 alone. The proposed cap could save merchants up to £1.1 billion annually once fully implemented. Mastercard and Revolut had contended that the fee cap would undermine investment in payment networks and reduce innovation. However, the tribunal found the evidence presented did not substantiate claims of systemic financial disruption. The ruling also rejected Revolut’s argument that its business model, reliant on low-cost card issuance, would be disproportionately affected. The outcome may prompt similar regulatory scrutiny across the European Union, where the European Commission is currently reviewing its own interchange fee framework. Financial institutions, payment processors, and fintechs are now reassessing their revenue models, with analysts projecting potential adjustments in card rewards programs and merchant service fees.