The UK High Court’s recent decision to uphold the Payment Systems Regulator’s (PSR) powers to regulate payment systems marks an important moment for the industry. By confirming the PSR’s authority to cap cross-border interchange fees, the ruling clears the way for continued regulatory action aimed at protecting UK businesses from fees the regulator has deemedunduly high.
For issuers, however, this move signals that the economics of issuing, particularly cross-border issuing, are continuing to shift, meaning in a lower-interchange world, the role of issuing infrastructure becomes more important than ever.
A Brief History
Cross-border interchange has long played an outsized role in issuer revenue models. It has helped subsidise customer acquisition, fund rewards programmes and support international expansion. While fee caps don’t eliminate interchange, they do place a ceiling on how much issuers can rely on it.
The result is structural margin pressure. Operational complexity doesn’t disappear, compliance requirements don’t easeand customer expectations don’t fall, but the revenue per transaction tightens. Such factors change issuing from a yield-driven model to one where scale, efficiency and performance determine success.
Why Lower Interchange Raises the Stakes for Issuers
When interchange is compressed, the margin for error narrows significantly. Approval rates, uptime and processing performance become materially more important because every failed transaction represents lost revenue that is harder to recover in a capped-fee environment.
At the same time, customer expectations continue to rise and competitive pressure intensifies as both fintechs and established institutions invest in modernising their propositions. Issuers can no longer rely on pricing or rewards alone to offset these pressures without risking customer attrition. Instead, success increasingly depends on the ability to grow efficiently, drive higher card usage and expand into new markets without adding unnecessary complexity or cost. In this environment, infrastructure moves from a supporting role to a strategic one, underpinning the scale, resilience and speed issuers need to remain competitive.
Offsetting Fee Compression Through Smarter Growth
As interchange revenues are compressed, issuers that continue to perform well focus on scale. When revenue per transaction falls, volume becomes critical, making higher card usage, stronger approval rates and more frequent transactions central to maintaining profitability. Growth is no longer simply about acquiring more customers; it is about maximising the value of every active account by encouraging usage across a wider range of everyday and cross-border use cases. In this environment, even incremental improvements in transaction success and engagement can have a meaningful impact on the bottom line.
At the same time, geographic expansion remains one of the most effective ways for issuers to offset fee compression. Cross-border activity continues to drive volume and engagement, but expansion only delivers value when it can be executed efficiently. Issuers need the ability to enter new markets quickly, connect to local switches, support multiple schemes and currencies, and navigate local regulatory requirements without rebuilding their operating model for each new geography. When done well, geographic scale becomes a margin strategy in its own right, allowing issuers to grow without introducing unnecessary complexity or cost.
Operational efficiency becomes the third critical factor. Lower interchange places greater emphasis on cost discipline, exposing the limitations of manual processes, fragmented systems and market-specific workarounds. These approaches may function when margins are healthy, but they do not scale in a tighter environment. Issuers increasingly need operating models that are designed for growth from the outset, enabling them to launch expand and adapt without adding friction or overhead at every stage.
Why Issuing Infrastructure Becomes a Strategic Lever
As regulation reshapes interchange economics, issuing infrastructure moves from the background to the foreground and this is where Paymentology plays a decisive role. In a capped-fee environment, issuers need more than basic processing; they need infrastructure that consistently delivers high performance, maximises authorisation success and supports rapid growth across 50 + markets without adding operational complexity.
Paymentology’s global issuing platform is designed specifically for this reality. By enabling issuers to operate across regions, schemes and currencies from a single, modern infrastructure, Paymentology helps remove the friction that often constrains growth in legacy or fragmented processing models. High availability, low latency and resilient architecture ensure that every transaction has the best chance of being approved, an increasingly important factor when revenue per transaction is capped.
Just as importantly, Paymentology allows issuers to expand and adapt without rebuilding their technology stack market by market. Whether launching in new geographies, supporting new use cases or scaling transaction volumes, issuers can grow efficiently while maintaining operational control and cost discipline. In an environment where interchange economics are under pressure, this ability to scale globally without proportional increases in cost becomes a powerful competitive advantage.
As issuers navigate a future defined by tighter margins and greater regulatory scrutiny, infrastructure is a key determinant of long-term success. Paymentology provides the global, high-performance issuing foundation that allows issuers not just to withstand these changes, but to grow through them.
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