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UK Cross-Border Interchange Fees: What Merchants Need to Know in 2025

Introduction

If your business sells between the UK and the European Economic Area (EEA), there’s a regulatory change in motion that could directly impact your UK cross-border interchange fees in 2025.

The UK’s Payments Systems Regulator (PSR) has proposed new price caps on cross-border card interchange fees — the fees merchants pay when accepting card payments from customers across borders. This move could save merchants hundreds of millions of pounds each year, but legal challenges and political changes mean the outcome is far from certain.

At Gropay, we help merchants navigate these shifting payment landscapes so they can protect margins, reduce costs, and improve payment acceptance rates — no matter what happens in regulation.

Background: Why Interchange Fees Increased After Brexit

Before Brexit, UK–EEA card transactions were subject to EU interchange caps:

• Debit cards: 0.2%
• Credit cards: 0.3%

After the UK left the EU, these caps no longer applied. Visa and Mastercard increased card-not-present (CNP) cross-border fees to:

• Debit cards: 1.15%
• Credit cards: 1.5%

For high-volume cross-border merchants, these increases represented a significant jump in cost without a corresponding improvement in service — a clear profitability hit.

The PSR’s Proposal

Following an investigation, the PSR concluded that:

• There is a lack of effective competition in the cross-border card market.
• The fee increases are not cost-based and harm UK–EEA trade.

In December 2024, the PSR published its final report and proposed:

• Capping card-not-present cross-border interchange fees at 0.2% for debit and 0.3% for credit.
• Applying the caps to all UK–EEA CNP transactions, including e-commerce.

The consultation period is open until 7 February 2025. See the PSR’s official site: psr.org.uk.

Complicating Factors: Politics and Legal Challenges

1. Government restructuring of regulation
   • In March 2025, the UK government announced plans to abolish the PSR and transfer its powers to the Financial Conduct Authority (FCA).
   • This creates uncertainty around timeline and enforcement priorities.
2. Industry pushback
   • Visa and Revolut have launched legal challenges against the proposed caps, arguing the PSR is exceeding its authority.
   • Broader competition action is being explored, potentially extending beyond interchange.

Why This Matters to Merchants

1) Potential cost savings

If the caps are implemented as proposed, merchants could see significant reductions in cross-border processing costs — especially those with high UK–EEA transaction volumes.

2) Need for proactive optimisation

Merchants who review and optimise their acquiring setups, currency routing, and fee structures now can realise savings even before the regulatory changes take effect.

3) Uncertain timeline

Delays from political restructuring or legal challenges mean relying on regulation alone is risky.

What Merchants Should Do Now

1. Audit cross-border payment costs
   • Identify the true cost of UK–EEA card transactions, including interchange, scheme fees, and acquirer mark-ups.
2. Benchmark against alternatives
   • Compare current arrangements with multi-acquirer setups, local acquiring, or alternative payment methods to reduce costs.
3. Implement quick wins
   • Adjust payment routing and acceptance logic to favour lower-cost channels without reducing approval rates.
4. Stay informed
   • Track the PSR consultation outcome and related FCA policy developments.

How Gropay Can Help

At Gropay, we specialise in helping international merchants optimise cross-border payments.

• Payment cost analysis and benchmarking.
• Acquiring strategy design for multi-market optimisation.
• Implementation of routing and acceptance improvements.

Whether the PSR caps happen or not, we help you find and implement cost-saving opportunities today. Contact us to discuss how these changes could impact your margins — and how to build a future-proof payment strategy.

FAQ

Will this definitely lower my processing costs?

It could, but timing is uncertain. Many merchants can lower effective costs now with routing and acquiring strategy improvements.

Does this affect domestic UK or EU transactions?

No, the proposal targets UK↔EEA cross-border, card-not-present transactions.

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