Brexit Spells End To Cross-Border Interchange Fee Caps

UK consumers will lose another layer of protection after Brexit when dealing with EEA-based suppliers, as the government will no longer cap interchange fees where either the merchant's acquirer or the payment card issuer is based outside the UK.  This follows the erosion of other consumer protection measures for UK consumers buying from suppliers in the remaining EEA countries.

The proposed changes to the UK Interchange Fee Regulations for Brexit purposes would take effect on 30 March or end December 2020 (depending on whether there is a Withdrawal Agreement and related transition period). Among other things, the proposed Regulations:

• Limit the scope of the Regs from the EEA to the UK to transactions that take place only within the UK (both the acquirer and the card issuer are located in the UK), so cross-border card payments between the UK and the EEA will no longer be within scope of either the UK or EU interchange fee regs (i.e. payments made within the UK will continue to have caps on interchange fees, while payments where either the acquirer or the card issuer is based outside the UK (including in the EEA) will no longer be subject to the caps); and

• Allow for regulations setting lower caps on UK debit and credit card transactions, and a maximum cap for UK debit card transactions.

Use It Or Lose It: The UK Temporary Permission (Passport) Regime

The UK's Financial Conduct Authority has told firms based elsewhere in the European Economic Area who rely on a 'passport' to offer their financial services in the UK to notify the FCA if they intend to use the UK "temporary permissions regime" (TPR). The Prudential Regulatory Authority has issued a similar direction to the banks and other firms it regulates.

Notifications to the FCA must be made by submitting the Temporary Permission Notification Form containing the necessary information via the FCA's "Connect" system between 7 January and 28 March 2019.

Firms that have not submitted a notification during that period will not be able to use the TPR.

The FCA told Parliament in 2016 that there are 8,008 EEA firms holding 23,532 passports covering their UK financial services offerings.