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Banks Europe Fintech

PSR Fines Four NatWest Group Banks £1.82M For Overcharging On Credit Cards

The Payment Systems Regulator (PSR) has taken action against National Westminster Bank Plc, Royal Bank of Scotland Plc, Ulster Bank Ltd and Coutts & Company for overcharging interchange fees on credit cards.

The regulator has fined the banks £1.82million for failing to comply with regulations after an investigation found that the banks wrongly profited from almost £1.2million in excess interchange fees between March 2016 and 2018.

The PSR spotted the issue during regular monitoring activity it carries out in its role as the main UK authority of overseeing the interchange fee regulation (IFR).

The banks incorrectly treated a number of cards as being ‘commercial’ cards when they should have been treated as ‘consumer’ cards. This meant that fees charged by these banks weren’t capped and were set at too high a level. As a result, both acquirers and, ultimately, merchants were overcharged.

Chris Hemsley, managing director of the PSR, said: “The interchange fee caps were put in place to reduce the cost of accepting customer card payments for shops and other merchants’ businesses. The banks broke the rules by failing to bring themselves in line with the caps.

“As soon as we identified the problem, we stepped in to make sure the banks put a stop to it. Not only have the banks reimbursed the fees to acquirers which they were not entitled to collect, but we have also fined them for their failings.

“As demonstrated in this case, we will intervene and take robust action where needed to ensure compliance, including with the Interchange Fee Regulation.”

Because the banks agreed to settle at the earliest possible stage,  they qualified for a 30 per cent early settlement discount in accordance with the PSR’s approach to early settlement in IFR cases. Were it not for this discount, the PSR would have imposed a total financial penalty of £2.6million on the banks.

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