Mastercard Europe SA, R (on the application of) v Payment Systems Regulator

The Payment Systems Regulator may use a general direction under Financial Services (Banking Reform) Act 2013, section 54, to impose price caps on interchange fees. The statutory language is broad enough to cover pricing, which forms part of the operation and management of a payment system. Specific powers to vary fees on application do not impliedly restrict the general-direction power, because the powers serve different purposes. Nor must competition concerns be addressed only through concurrent competition powers or a market investigation by the CMA. Section 108 does not prevent such price caps where the regulator’s motivating objective is to advance competition and protect service users, rather than to enable or maintain access to a payment system.

Mastercard Europe SA, Visa Europe Limited and Revolut Bank UAB brought conjoined rolled-up judicial review claims against the Payment Systems Regulator. The claims challenged the PSR’s decision in principle to impose caps on outbound UK-EEA consumer card-not-present interchange fees by general direction.

The challenge was confined to vires. The principal issue was whether section 54 of the Financial Services (Banking Reform) Act 2013 authorised price caps. Mastercard and Revolut additionally argued that section 108, read with regulation 103 of the Payment Services Regulations 2017, prohibited the proposed exercise of the power.

1. Ground 1 allowed in principle; claims dismissed. Section 54(2)(a) of the Financial Services (Banking Reform) Act 2013 permits directions requiring or prohibiting specified action in relation to a regulated payment system. Pricing decisions are part of the system’s operation and management. The distinction between operational matters and pricing matters was a false dichotomy. A general direction imposing interchange-fee caps therefore falls within the statutory language (paras [154]-[164]).
2. The statutory objectives in sections 49–52 support that construction. General directions are among the PSR’s general functions, and the proposed caps were intended to advance the competition and service-user objectives. Section 50(3)(k), which identifies fees and charges as relevant to effective competition, provides further support (paras [166]-[177]).
3. The existence of concurrent competition powers, including market-study and CMA market-investigation routes, did not exclude section 54. Nor did sections 56–58, including the specific power under section 57 to vary fees and charges on application. Those powers concern different situations, including dispute resolution under particular agreements. Section 54 can address systemic problems through general directions (paras [178]-[206]).
4. The absence of a statutory appeal on the merits against a general direction did not imply a limitation on section 54. General regulatory decisions may properly be subject to judicial review, while specific or dispute-resolution decisions may carry statutory appeal rights. The authorised push-payment provisions also showed that a section 54 direction may have intrusive and costly consequences (paras [207]-[210]).
5. Section 108 did not apply. Its purpose was to ensure that access and participation requirements within regulation 103 of the Payment Services Regulations 2017 were enforced through Part 10 of those Regulations rather than sections 54–58 of FSBRA. The relevant question was the PSR’s motivating objective, not merely whether the measure might affect access or participation. The price caps were directed to competition and service-user concerns, and there was no evidence that their purpose was to enable or maintain access or participation. R (Notemachine UK) v Payment Systems Regulator was distinguishable because access and continued participation were the purpose of the measure in that case (paras [247]-[289]).
6. Leave to apply for judicial review was granted because the grounds were arguable, but, after full consideration, all three claims were dismissed (paras [290]-[291]).