On Tuesday (June 21), the U.K.’s Payment Systems Regulator (PSR) detailed plans for two market reviews it will carry out focusing on card fees. One will consider scheme and processing fees, and the other will look at cross-border interchange fees.
Focusing on the Mastercard and Visa networks, which between them account for 99% of debit and credit card payments in the U.K., both reviews are being set up in response to rising fees.
With regards to scheme and processing fees, the announcement comes in response to an earlier review in which the PSR found that the fees paid by acquirers had increased significantly from 2014 to 2018. Since then, stakeholders have reported to the authority that scheme fees have continued to rise.
On the matter of cross-border interchange fees, the PSR has found that these have also increased significantly in the last year. Since the U.K. left the EU, the PSR reports that Visa and Mastercard have increased these fees fivefold. The body is initiating the review: “to understand the rationale behind these increases and whether they are an indication that the market is not working well.”
In a post on the Regulator’s website: Natalie Timan, Head of Strategy at PSR, said:
“Cards are the most popular way for consumers to make a payment. To accept card payments, merchants must pay certain fees which can ultimately impact the cost we all pay for goods and services. We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.
“We’ve been gathering information since the start of this year and have identified that a detailed review of the market is needed. We have set out what we will assess in these reviews, which will then inform any decisions on the steps we might need to take to promote effective competition or to address any harm.”
Currently in draft form, the terms of reference for the market reviews are open for consultation until Tuesday, August 2. The PSR wants to receive feedback on the draft terms of reference, in particular the consultation questions. It welcomes any evidence in support of submitted views.
During the consultation period the PSR will also be running series of engagement events and encourages stakeholders to take part in these to help shape the scope of the imminent reviews.
The cross-border fee hike is just the latest in a series of hurdles that U.K.-based businesses who export to the EU have had to face in the wake of the country’s exit from the bloc.
Read more: Lack of Payments Integration Hampers Growth at Small UK eCommerce Sites
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