Payments regulatory news, July 2020

Hogan Lovells

Hogan Lovells

Recent regulatory developments include the UK FCA/PSR update on mapping and an EU Commission review report on the Interchange Fee Regulation.


  • COVID-19: FCA and PSR update on mapping access to cash
  • Interchange Fee Regulation: Commission review report

COVID-19: FCA and PSR update on mapping access to cash

The UK Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) have published a joint statement on their work to map access to cash in light of COVID-19 and how this will shape their future work in this area. The statement follows the regulators' previous statement of 16 June 2020 on their approach to access to cash issues.

Throughout the pandemic, the PSR, the FCA, other regulators and the industry have collaborated to create a single database of the UK's cash access points. This means that the FCA and the PSR can monitor where access to cash "cold spots" are emerging and coordinate the industry response to ensure that vulnerable and self-isolating groups can continue to access cash. The database does not include cashback, which is an additional source of cash for customers.

Following the FCA and the PSR's work, the PSR has published:

  • a webpage providing information on the coverage of access to cash across the UK. It describes in more detail the work the FCA and the PSR are conducting to map access to cash coverage, and how this will feed into their longer-term activities on access to cash; and
  • a webpage explaining the FCA and PSR's work monitoring access to cash cold spots. The regulators collected information on approximately 19,000 banks, building societies and post office branches and approximately 60,000 ATMs.

Ensuring access to cash is a priority for the FCA and the PSR. They will continue to work together to, among other things, maintain widespread access to free ATMs in the short term and monitor the impact of bank branch closures on consumers' ability to access cash. They will also explore with the industry how it can develop a sustainable and appropriate solution, which allows the industry to meet the cash needs of consumers and businesses in the longer term through a range of channels.

In addition, the regulators are working on a project with the University of Bristol to build on the COVID-19 mapping work. The project aims to develop a comprehensive set of socio-economic factors and consumer characteristics that are relevant to understanding consumer cash needs and the availability of access to cash at a national and local level. They intend to publish a final report from the project later on in 2020.

Interchange Fee Regulation: Commission review report

The European Commission has published a report on the impact of Regulation 2015/751 on interchange fees for card-based payment transactions (Interchange Fee Regulation).

The Regulation, which came into effect in 2015, was intended to help create a single market for card payments across the EU and to create a level playing field. It set a cap on interchange fees for consumer credit and debit card transactions and introduced several provisions aimed at enhancing market transparency, competition, and the functioning of the EU single market. The Commission is required under Article 17 of the Regulation to report by mid-2020 on its operation and on whether the maximum cap for interchange fees should be adjusted. The Commission has previously published a study on the application of the Regulation which has helped inform its review, together with input from stakeholders.

The report concludes that the main objectives of the Regulation have been achieved, as interchange fees for consumer cards have decreased, leading to reduced merchants' charges for card payments, and ultimately resulting in improved services to consumers and lower consumer prices. In addition, market integration has improved through the increased use by merchants of acquirers (banks servicing merchants) located in other member states (cross-border acquiring services) and more cross-border card transactions.

However, the Commission states that further monitoring and reinforced data gathering is necessary in some areas, including those where only limited time has elapsed since the Regulation entered into force.

Given its positive impact and the need for more time to see the full effects of the Regulation, the Commission concludes that it would not be appropriate to propose any revision of the Regulation at this time.

As a follow-up to the report, the Commission is planning a public hearing with stakeholders on 7 December 2020.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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