If your business sells to European customers, a slice of your card-processing cost has quietly climbed since Brexit, and most UK merchants never noticed. When a shopper pays with a card issued in the European Economic Area, the interchange fee baked into your rate is several times higher than it was in 2020. The Payment Systems Regulator (PSR) has spent three years trying to reverse that, and after winning a major court fight in January it is now building the long-term cap. For any UK ecommerce or hospitality business with international customers, this is worth understanding before your next provider review.

How cross-border interchange got so expensive

Interchange is the wholesale fee that flows from your acquirer to the cardholder's bank on every transaction. While the UK was in the EU, cross-border interchange between the UK and the EEA was capped at 0.2% for consumer debit and 0.3% for consumer credit, the same levels that still apply to purely domestic UK card payments. After Brexit those caps fell away for UK-EEA transactions, and Visa and Mastercard raised the fees roughly fivefold: to about 1.15% for consumer debit and 1.5% for consumer credit on card-not-present transactions, according to the PSR's market review into cross-border interchange fees. The PSR estimated this added in the region of £150 million to £200 million a year to UK businesses' costs, almost all of it falling on online merchants who sell across borders.

Where the regulation stands now

The PSR concluded that the schemes faced little competitive pressure and could raise these fees without justification, and it proposed a price cap to bring them back toward pre-Brexit levels. Visa, Mastercard and Revolut challenged the regulator's power to do so through a judicial review. On 15 January 2026 the High Court dismissed that challenge, confirming the PSR has the authority to cap cross-border interchange. The regulator set out the ruling here. Rather than rush an interim cap, the PSR is now developing the methodology for a durable long-term cap, so the timing depends on that work and on how the PSR's responsibilities transfer into the FCA over the coming year. The direction is settled; the exact numbers and date are not.

  • The win is procedural, not yet a price cut: the court confirmed the PSR can act, but no new cap level is in force on your statement today.
  • It targets UK-EEA traffic specifically: domestic UK interchange is unchanged, and card payments from outside the EEA, such as US or Asian issuers, sit under separate, often higher, international rates.
  • Any benefit reaches you through your acquirer: a lower interchange only lands on your bill if your pricing model passes it through, which is the crux of the matter for most merchants.

Why most merchants will not see the saving automatically

Here is the part that decides whether this regulation ever helps you. On a blended tariff you pay one all-in rate for every card, so when interchange falls the saving is absorbed by your acquirer unless they choose to hand it back. You would have no way of knowing it happened. On IC++ pricing the picture is different: interchange, scheme fees and your provider's margin are itemised separately, so a regulated reduction in cross-border interchange shows up directly as a lower line on your statement. If a meaningful share of your turnover comes from European-issued cards, that transparency is the difference between benefiting from the PSR's work and watching the benefit disappear into someone else's margin.

This is also a reminder that the headline rate on a landing page tells you very little. A merchant selling mostly to UK customers and a merchant selling heavily into France or Germany can be quoted the same blended rate and pay very different effective costs, because the second one is carrying far more of that inflated cross-border interchange.

What to do this week

You do not need to wait for the cap to take a useful step now. Pull a recent statement and work out what proportion of your transactions come from EEA-issued cards, then ask your provider a few direct questions:

  • How much of my volume is cross-border EEA, and what interchange am I paying on it? A good acquirer can break this out for you.
  • Am I on blended or IC++ pricing, and would IC++ surface a cross-border cap when it lands? For internationally exposed merchants, IC++ is often the fairer fit.
  • If interchange falls, will the reduction be passed through to me, and how quickly? Get the answer in writing before you sign or renew.

None of this requires a switch. It simply means you will be positioned to capture the benefit when the PSR's cap arrives, rather than financing the status quo by default.

How Monek approaches it

Monek is FCA-authorised in our own right (FRN 920628), and we offer both transparent blended pricing from 0.99% and IC++ from 0.49% above £200k a year, with next-day settlement, a free WooCommerce payment gateway plugin, native Xero integration, Virtual Terminal and Pay by Link as standard. For merchants with real international exposure we will model your last 12 months on both bases using your actual card mix, so you can see exactly what your cross-border traffic is costing today and whether IC++ would let a future cap reach your bottom line. If you would like an honest read on where you stand, our team will run a no-obligation comparison and talk you through the options.