Revolut and Visa file legal challenges against UK payments regulator

Keep knowledgeable with free updates

Merely signal as much as the UK monetary regulation myFT Digest — delivered on to your inbox.

Revolut and Visa have filed authorized challenges in opposition to the UK’s Cost Programs Regulator, with the businesses arguing that the watchdog has overstepped its powers with a proposed cap on worldwide digital transaction charges.

The transfer provides to stress on the PSR as the federal government opinions the nation’s regulatory panorama in a bid to chop purple tape and enhance progress. The regulator attracted ire from business and politicians over controversial fraud reimbursement measures final 12 months, fuelling hypothesis that its powers might be reined in.

The PSR proposed a plan in 2023 to cap interchange charges — that are levied by Visa and Mastercard on behalf of banks — on cross-border on-line funds after it discovered that that they had risen greater than fivefold since Brexit.

The cap was designed “to guard UK companies from overpaying” following complaints concerning the excessive charges charged to retailers by Visa and Mastercard, the PSR mentioned on the time.

Nevertheless, the proposal has sparked furore from European banks and fintechs, which earn money from the charges. The Monetary Instances beforehand reported {that a} European banking commerce physique advised the Treasury earlier this 12 months that the cap would make them “lose cash on every transaction”, as their value of working was now larger than the utmost charges allowed below the cap.

London-based Revolut on Friday mentioned that its European entity had utilized for a judicial overview of the PSR’s plan. “We disagree with the PSR’s evaluation and imagine it has acted past its statutory powers in imposing these caps. We’ve due to this fact requested the courtroom to overview, and finally overturn the PSR’s choice.”

Visa mentioned: “We respect the PSR’s function as an financial regulator. This slender authorized motion is concentrated solely on the PSR’s authorized authorisation and course of associated to cost setting to make sure a good and thorough course of, and provides readability to the business. That is vital to future progress and funding within the UK.”

European banks and fintechs argue that processing funds has grow to be dearer because the UK left the EU, notably with the rise of digital wallets resembling Apple Pay and Google Pay including to their prices.

An individual aware of the PSR’s considering mentioned it believed it had the authorized powers as set out in its report, including that if there have been a judicial overview, it will be ready to defend the choice robustly.