The UK High Court has ruled in favor of the Payment Systems Regulator (PSR), confirming that it has the legal authority to impose caps on cross-border card interchange fees charged to UK merchants.

The decision follows a legal challenge brought by Visa, Mastercard and fintech firm Revolut, which argued that the regulator had exceeded its statutory powers by proposing price controls on international card transaction fees. The court rejected those claims, with Judge John Cavanagh finding that the PSR is empowered to intervene where it believes the market is not functioning effectively.

The case centers on fees applied to online transactions where European customers purchase goods or services from UK-based merchants. Following the UK’s exit from the European Union, interchange fees on these transactions rose sharply, increasing several times over between 2021 and 2022. The PSR has said these increases have placed a significant financial burden on UK businesses.

While the ruling confirms the regulator’s authority, the precise level of any fee cap and the timeline for its introduction have yet to be determined. The PSR is currently consulting on the methodology it will use to assess what constitutes an appropriate cap, with further decisions expected once that process concludes.

Commenting on the judgment, PSR Managing Director David Geale said the ruling reinforces the regulator’s ability to act in the interests of businesses and consumers, and allows it to continue work aimed at ensuring international card payment fees are fair and proportionate.

Visa, Mastercard and Revolut have not commented publicly on the outcome of the case. Previously, card networks have argued that fee caps could have unintended consequences for the payments ecosystem, including reduced incentives for innovation and investment.

Legal and industry experts note that while retailers could benefit from lower transaction costs if a cap is introduced, banks and financial technology firms may face pressure on a key source of revenue, potentially reshaping parts of the payments market.