The PSR recently announced that it would not proceed with a Stage 1 interim price-cap remedy for cross-border interchange fees. Instead, it has consulted on the methodology for developing the longer-term Stage 2 price-cap approach that it proposes to adopt when determining an appropriate level of multilateral interchange fees for UK-EEA CNP transactions.
Our draft response is below. In it, we state that:
- We have significant concerns—both legal and practical—about the PSR’s proposal to adopt the “Merchant Indifference Test” as the starting point for setting long-term UK–EEA cross-border interchange fees (and potentially other interchange fees).
- In addition, if the MIT is applied, the choice of comparators must be realistic (e.g., Open Banking, instant payments, SEPA); “Always-Card” distortions must be excluded; and the Stage 2 cap should not exceed the 2015 IFR levels and could reasonably be set lower to reflect technological alternatives and current competitive conditions.
The deadline to submit the response to the PSR is Friday, 5 December, so please let me have any comments or thoughts by 5 p.m Thursday 4th December.
