Interchange Fee Regulation in the UK: The 0.2% and 0.3% Caps Explained

LAST REVIEWED 2026-09-06

What does the Interchange Fee Regulation do?

The Interchange Fee Regulation (IFR) sets a maximum fee that a card issuer can charge for processing a consumer card transaction. In the UK, the cap is 0.2% for debit cards and 0.3% for credit cards. This regulation applies to transactions where both the cardholder and the business are in the UK.

The IFR was originally an EU regulation, but it was retained in UK law after Brexit. It applies to all consumer debit and credit card transactions within the UK. The caps are on the interchange fee itself, not the total fee charged by the card machine provider. The total fee includes scheme fees and the acquirer margin, which are not capped.

For a business, the interchange fee is a cost that is passed on by the card machine provider. If the provider charges a blended rate, the interchange fee is part of that rate. If the provider charges interchange plus plus, the interchange fee is shown separately on the statement. The caps help keep costs down for businesses, but they do not control the other components.

These amounts are small, but they add up over many transactions. The caps are set by the regulation and are not negotiable.

What are the exact caps for debit and credit cards?

The cap for consumer debit card transactions is 0.2% of the transaction value. The cap for consumer credit card transactions is 0.3% of the transaction value. These caps apply to transactions within the UK, including online and in-person payments.

The caps were introduced in 2015 and have not changed since. They apply to all consumer cards issued by Visa and Mastercard, as well as other card schemes. The caps are on the interchange fee, which is the fee paid by the acquirer to the issuer. The acquirer is the card machine provider, and the issuer is the bank that issued the card.

These caps are set by the regulation and are not negotiable.

It is important to note that the caps apply only to consumer cards. Commercial cards, such as business credit cards, are not capped. This is a key difference that businesses should be aware of when accepting payments.

Which transactions are not covered by the caps?

Commercial cards, such as business credit cards and corporate cards, are not covered by the caps. Also, some cross-border transactions are not covered. The caps apply only to consumer cards issued in the UK and transactions where the business is also in the UK.

Commercial cards are used by businesses for expenses and procurement. The interchange fee for these cards is not capped, so it can be higher. This is because commercial cards often offer rewards and benefits, which are funded by higher interchange fees.

Cross-border transactions are those where the cardholder and the business are in different countries. Since 2021, the UK has not been part of the EU, so the EU regulation no longer applies to UK businesses. However, the UK has its own regulation that caps interchange for UK domestic transactions. For cross-border transactions, the caps may not apply, depending on the countries involved.

For a business, it is important to know which transactions are capped. If a business accepts commercial cards, it may pay higher interchange fees. This is reflected in the total card processing cost. The table below shows the components of a card fee, including interchange, scheme fees, and acquirer margin.

How did cross-border interchange change after Brexit?

After Brexit, the UK retained the Interchange Fee Regulation for domestic transactions, but cross-border transactions with the EU are no longer subject to the EU caps. This means that interchange fees for transactions between the UK and the EU can be higher than the caps.

Before Brexit, the EU regulation capped interchange for all transactions within the EU, including cross-border ones. After the UK left the EU, the UK government passed legislation to retain the caps for domestic transactions. However, for transactions between the UK and the EU, the EU regulation no longer applies. The EU has its own caps for transactions within the EU, but these do not apply to UK businesses.

As a result, a UK business accepting a card from an EU customer may pay a higher interchange fee than a domestic transaction. The exact fee depends on the card scheme and the countries involved. Some card schemes have set their own cross-border interchange rates, which may be higher than the caps.

For a business that sells to EU customers, this could mean higher costs. It is important to check the interchange rates for cross-border transactions with the card machine provider. The provider should be able to explain the rates and how they are calculated.

Who enforces the interchange fee caps in the UK?

The Payment Systems Regulator (PSR) is responsible for enforcing the Interchange Fee Regulation in the UK. The PSR can investigate and take action against card schemes and issuers that do not comply with the caps.

The PSR was established in 2015 and has the power to enforce the regulation. It can impose fines and other penalties for non-compliance. The PSR also monitors the card market to ensure that the caps are being applied correctly.

For a business, the enforcement of the caps means that the interchange fee on consumer debit and credit cards should not exceed the caps. If a business believes that it is being charged more than the cap, it can report the issue to the PSR. The PSR can then investigate and take action.

It is also important to note that the caps apply to the interchange fee, not the total fee charged by the card machine provider. The provider may charge a higher total fee, but the interchange component should be within the caps. Businesses should check their statements to see if the interchange fee is being charged correctly.

What does the regulation mean for your fee statement?

On a fee statement, the interchange fee should be shown separately if the provider uses interchange plus plus pricing. If the provider uses blended pricing, the interchange fee is included in the overall rate. The caps mean that the interchange component for consumer cards should not exceed 0.2% for debit and 0.3% for credit.

For example, if a business has a monthly card turnover of £2,000 and pays a blended rate of 1.69%, the total fee is £33.8. This includes interchange, scheme fees, and the acquirer margin.

Businesses should check their statements to see if the interchange fee is itemised. If it is not, they can ask the provider for a breakdown. The table below shows the components of a card fee, including interchange, scheme fees, and acquirer margin. This can help businesses understand where their money goes.

It is also important to note that the caps do not apply to commercial cards. If a business accepts commercial cards, the interchange fee may be higher. This is reflected in the total cost. Businesses should consider the mix of cards they accept when evaluating their fees.

How do the caps affect the total cost of card acceptance?

The caps on interchange fees are only one part of the total cost of card acceptance. The total cost includes scheme fees and the acquirer margin. The caps help to keep the interchange component low, but the other components can vary.

For example, the table below shows the monthly fee cost at published pay-as-you-go rates. At a monthly turnover of £2,000, a provider charging 1.69% would cost £33.8. A provider charging 1.75% would cost £35.

The caps on interchange mean that the interchange component is limited, but the scheme fees and acquirer margin are not. Scheme fees are set by Visa and Mastercard and can vary. The acquirer margin is the profit for the card machine provider. These are not regulated, so they can be higher.

Businesses should compare the total cost of card acceptance, not just the interchange fee. The table below shows the monthly cost for different providers at different turnover levels. This can help businesses see the impact of the caps on their overall costs.

What should a business check on its card fee statement?

A business should check that the interchange fee on its statement does not exceed the caps for consumer cards. It should also check that the total fee is in line with the agreed rate. If the statement shows a blended rate, the interchange component is not visible, but the business can ask for a breakdown.

Businesses should also check for any additional fees, such as monthly fees or fixed fees. Some providers charge a fixed monthly fee, as shown in the table below. For example, Tide charges £2.99 plus VAT, and Worldpay charges £20.00. These fees are in addition to the percentage fee.

It is also important to check the interchange fee for commercial cards. If a business accepts commercial cards, the interchange fee may be higher than the caps. The statement should show the interchange fee for each transaction or a summary of the interchange fees.

Finally, businesses should check that the interchange fee is calculated correctly. The cap is 0.2% for debit and 0.3% for credit. If the interchange fee is higher, the business should contact the provider or the PSR.

How does the regulation apply to Amex and other card schemes?

The Interchange Fee Regulation applies to all card schemes, including American Express (Amex). However, Amex operates a different model, as it is both the issuer and the acquirer. This means that the interchange fee is not always visible.

For Amex, the fee charged to the business is often a single rate that includes interchange, scheme fees, and the acquirer margin. The caps may still apply, but it is harder to see the breakdown. Amex is a closed loop, meaning it issues the cards and processes the transactions.

In the UK, the caps apply to Amex consumer cards, but the way the fee is structured may mean that the cap is not directly applied. Businesses should check their Amex statements to see if the fee is within the caps. If not, they can ask Amex for a breakdown.

For more information on Amex and premium card acceptance costs, see Accepting Amex and Premium Cards: What UK Businesses Pay. This can help businesses understand the costs associated with accepting Amex.

What is the difference between blended and interchange plus plus pricing?

Blended pricing is a single rate that includes interchange, scheme fees, and the acquirer margin. Interchange plus plus pricing shows the interchange fee, scheme fees, and acquirer margin separately. The caps on interchange are easier to see with interchange plus plus pricing.

With blended pricing, the business pays a single percentage rate, such as 1.69% or 1.75%. This rate is the same for all transactions, regardless of the card type. The interchange fee is not shown separately, so it is harder to see if the caps are being applied.

With interchange plus plus pricing, the business pays the actual interchange fee, plus the scheme fees, plus the acquirer margin. This means that the cost varies depending on the card type. For consumer debit cards, the interchange fee is capped at 0.2%, and for consumer credit cards, it is capped at 0.3%.

For a business, interchange plus plus pricing can be more transparent, but it can also be more complex. The table below shows the components of a card fee. For more information on the differences, see Blended vs Interchange Plus Plus Card Pricing: Which Costs Less.

Glossary: card payment terms explained

Interchange fee: A fee paid by the acquirer to the card issuer for each transaction. It is capped for consumer cards in the UK.

Scheme fee: A fee charged by the card scheme (e.g., Visa or Mastercard) for using its network. It is not capped.

Acquirer margin: The profit margin added by the card machine provider. It is not capped and varies by provider.

Blended pricing: A single rate that includes interchange, scheme fees, and acquirer margin. It does not show the breakdown.

Interchange plus plus: A pricing model that shows interchange, scheme fees, and acquirer margin separately. It is more transparent.

Commercial card: A card issued to a business, such as a corporate credit card. Interchange for these cards is not capped.

Checklist: what to check on a fee statement or contract

• Check that the interchange fee on your statement does not exceed 0.2% for consumer debit cards.
• Check that the interchange fee on your statement does not exceed 0.3% for consumer credit cards.
• Ask your provider for a breakdown if you have blended pricing.
• Verify that commercial card interchange is not being charged at the capped rate.
• Review your statement for any fixed monthly fees, such as £2.99 or £20.00.
• Contact the PSR if you believe the caps are being breached.

Each item above maps to a line that must appear in the PSR summary box or the contract schedule, so a missing entry is itself a question for the provider.

Frequently asked questions

Does the IFR still apply after Brexit?

Yes, the Interchange Fee Regulation was retained in UK law after Brexit. It applies to domestic transactions within the UK. The caps of 0.2% for consumer debit and 0.3% for consumer credit remain in force. However, cross-border transactions with the EU are no longer subject to the EU regulation, so interchange fees for those transactions may be higher. The UK government has kept the caps to protect businesses from excessive fees.

Are business cards capped?

No, commercial cards are not capped under the Interchange Fee Regulation. This includes business credit cards and corporate cards. The interchange fee for these cards is set by the card scheme and can be higher than the caps. This is because commercial cards often offer rewards and benefits, which are funded by higher interchange fees. Businesses should be aware of this when accepting commercial cards.

Who regulates interchange in the UK?

The Payment Systems Regulator (PSR) is responsible for enforcing the Interchange Fee Regulation in the UK. The PSR monitors the card market and can take action against card schemes and issuers that do not comply with the caps. It can impose fines and other penalties. If a business believes it is being charged more than the cap, it can report the issue to the PSR. The PSR also works to promote competition and innovation in payment systems.

Why did EU cross-border interchange rise?

After Brexit, the UK is no longer part of the EU, so the EU regulation on interchange fees does not apply to transactions between the UK and the EU. The EU has its own caps for transactions within the EU, but these do not apply to UK businesses. As a result, card schemes have set their own cross-border interchange rates, which may be higher than the caps. This means that a UK business accepting a card from an EU customer may pay a higher interchange fee than before.

Do the caps apply to Amex?

Yes, the caps apply to Amex consumer cards in the UK. However, Amex operates a closed loop system, meaning it is both the issuer and the acquirer. This makes it harder to see the interchange fee separately. The fee charged to the business is often a single rate that includes interchange, scheme fees, and the acquirer margin. Businesses should check their Amex statements to see if the fee is within the caps. If not, they can ask Amex for a breakdown.