On January 15, the High Court in London rejected Visa’s judicial review challenge, confirming that the U.K. Payment Systems Regulator (PSR) may impose a cap on cross-border interchange fees. The ruling follows the PSR’s 2023 market review, which concluded that interchange fees for card-not-present transactions between the European Economic Area and the U.K. had risen more than fivefold since Britain’s exit from the EU.

According to PSR data, interchange rates jumped from near 0.2% in 2021 to 1.15% for debit cards and 1.50% for credit cards by the end of 2022. These fees are collected by issuing banks and incentivize use of Visa’s and Mastercard’s networks; the PSR found that U.K. businesses accepting EEA payments faced fees up to £120 million higher per quarter than under pre-Brexit levels.

Visa has publicly disagreed with the PSR’s provisional findings, arguing that enforced caps risk undermining investment and innovation in payment security. The court noted that caps could erode banks’ incentive to issue Visa-branded cards, potentially shifting volume to rival networks. U.K. consumer spending on cross-border e-commerce topped £300 billion in 2023, of which Visa facilitates an estimated two-thirds.

With the High Court judgment final, investors should monitor the PSR’s forthcoming cap consultation, expected in Q2, which may propose maximum interchange rates below current levels. A cap could compress Visa’s net transaction revenue in the U.K. by an estimated 5%–8%. Conversely, a grandfathering period or higher-than-anticipated cap would mitigate near-term margin pressure. Broader implications may emerge if other regulators follow the U.K.’s model.