Jessica Simor KC, Nicholas Gibson and Suzanne Rab represent the Payment Systems Regulator in a decisive win in a high-profile judicial review challenge, which has been dismissed by the court.
The High Court has dismissed judicial review challenges by Mastercard, Visa and Revolut Bank, confirming the power of the Payment Systems Regulator (“PSR”) to impose price caps on cross-border interchange fees through general directions under section 54 of the Financial Services (Banking Reform) Act 2013.
In R (Mastercard Europe SA & Ors) v Payment Systems Regulator [2025] EWHC 64 (Admin), Mr Justice Cavanagh rejected arguments that the PSR lacked statutory authority to regulate interchange fees for card-not-present transactions where the acquirer is in the UK and the issuer is in the European Economic Area. The claims concerned the PSR’s decision to impose price caps on these “outbound cross-border” interchange fees following a market review which found that increases in default fees were costing UK merchants and their customers approximately £150-200 million per year.
The Claimants advanced two main grounds of challenge. First, they argued that section 54 of the 2013 Act did not permit the PSR to impose price caps by means of general directions, contending that such intrusive measures could only be taken through specific regulatory powers or following a market investigation by the Competition and Markets Authority (“CMA”). Second, Mastercard and Revolut argued that section 108 of the Act precluded the PSR from exercising its section 54 powers where the Payment Services Regulations 2017 applied.
The Court rejected both grounds. On the first ground, Mr Justice Cavanagh held that the literal interpretation of section 54(2)(a) permitted the imposition of price caps on interchange fees, and there was no basis in the statutory framework to imply a limitation on this power. The Court found that the PSR’s purpose in imposing price caps was to advance the competition and service-user objectives set out in the Act, which was precisely what Parliament intended when granting the PSR its general regulatory powers. The Court also rejected arguments that the existence of appeal rights for certain regulatory powers, but not for general directions, indicated that Parliament did not intend section 54 to extend to intrusive measures affecting pricing.
On the second ground, the Court held that section 108 did not apply because the PSR’s purpose in imposing the price caps was not to enable persons to obtain or maintain access to, or participation in, payment systems, but rather to address competition concerns and protect service-users. The Court distinguished the case from R (Notemachine UK) v Payment Systems Regulator [2023] EWHC 1522 (Admin), where the regulatory measure in question was directly aimed at maintaining access and participation.
The judgment provides important clarification of the scope of the PSR’s regulatory powers and confirms that the regulator can take swift, targeted action to address market failures without being required to pursue the lengthier route of a market investigation reference to the CMA.
Jessica Simor KC, Nicholas Gibson and Suzanne Rab were instructed by Bevan Brittan LLP on behalf of the Payment Systems Regulator.
The judgment can be found here.