The UK’s payments regulator has fined NatWest Group £1.82 million for overcharging interchange fees on credit cards.
National Westminster Bank, Royal Bank of Scotland (RBS), Ulster Bank and Coutts & Company 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, the Payment Systems Regulator (PSR) says, with both acquirers and merchants overcharged.
As a result of the error, the PSR found that the banks wrongly profited from almost £1.2 million in excess interchange fees between March 2016 and March 2018. Customers overcharged got their money back, the PSR says, thanks to its investigative efforts.
The PSR opened its investigation on 4 May 2018 and as the banks agreed to settle at the earliest possible stage, they qualified for a 30% early settlement discount. Were it not for the discount, the fine would have stood at £2.6 million.
The Interchange Fee Regulation (IFR) was put in place to reduce the cost of accepting customer card payments for shops and other merchants’ businesses.
PSR managing director Chris Hemsley says: “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.”