Britain’s Payment Systems Regulator (PSR) has released provisional findings indicating that the substantial fee increases imposed by Visa and Mastercard on retailers have not corresponded with significant service improvements. Despite dominating the payment card market for years, the PSR’s investigation raises concerns about the lack of effective competition in the industry.
According to the PSR, both Visa and Mastercard have raised their scheme and processing fees by over 30% in real terms over the past five years. However, there is scant evidence to suggest a comparable enhancement in service quality during the same period. This fee escalation has reportedly added over £250 million in costs for UK businesses.
The PSR’s interim report, spanning 158 pages, underscores the limited options for UK businesses, as nearly all transactions involving UK-issued cards are processed through Mastercard and Visa, accounting for 95% of such transactions.
In response to these findings, Mastercard has expressed disagreement, highlighting the competitive nature of the payments industry and the wide array of payment options available to British consumers and businesses. Visa has not yet issued a statement on the matter.
As part of its proposed remedies, the PSR is considering measures to enhance transparency for users and to require Mastercard and Visa to clarify, consult on, and document reasons for price adjustments. Additionally, the regulator has suggested increased reporting of financial information by Mastercard and Visa to enhance ongoing scrutiny.
The public consultation period for these proposals will remain open until July 30. A final report on card schemes and processing fees is expected in the final quarter of the year. Depending on the final report’s conclusions regarding market effectiveness, the PSR may propose further remedies through a subsequent consultation process.
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