Visa and Mastercard Face Calls for More Transparency in UK

The U.K.’s payments watchdog says card giants Visa and Mastercard need to offer greater transparency.

The Payment Systems Regulator (PSR) said Tuesday (May 21) that it is proposing that both companies routinely turn over financial information to the regulator and consult with retailers and merchants ahead of any fee changes.

This came after the PSR conducted a review that showed that the two companies — which account for 95% of the British credit card market — had raised their fees 30% in the last five years, with no corresponding increase in service quality.

“We have also identified concerns about the transparency and quality of information available to those providing card services to businesses,” PSR Managing Director Chris Hemsley said in the announcement.

“Competition does not appear to be protecting businesses effectively. This leads us to provisionally conclude that the market is not working well.”

Hemsley added that the PSR was consulting on its provisional findings. If it does determine conclusively that “the market isn’t working well,” the regulator will consider remedies designed to give businesses and acquirers more accurate and relevant information about card services.

These remedies, he said, would also increase transparency around Mastercard and Visa’s business in Great Britain to allow the PSR “to better hold them to account.”

“Visa’s investments in reliable, safe and innovative digital payments mean that everyone in the UK can buy and sell with confidence,” a company spokesperson told PYMNTS in response to the PSR’s fundings. “This powers economic growth.”

The spokesperson added that the company’s fees “reflect the immense value that we provide to financial institutions, merchants and consumers including extremely high levels of security, near-perfect operational resilience, and a wide range of consumer protections and high-quality products and services that serve consumer and merchant needs.”

Meanwhile, a spokesperson for Mastercard told PYMNTS the company disagreed with the PSR’s conclusions.

“In its analysis, the PSR has failed to account for the significant investment required to provide a secure network which prevents billions of pounds of fraud each year,” the spokesperson said.

“We consistently deliver on our core promise to people and businesses: providing ways to pay and be paid that are hassle and worry-free, secure and convenient. We will continue to work transparently with the PSR and demonstrate the significant value Mastercard and electronic payments bring to the UK economy.”

Meanwhile, the companies are facing greater regulation in the U.S., with Sen. Roger Marshall (R-Kan.) recently pledging to secure a vote on the Credit Card Competition Act (CCCA).

This legislation requires banks to allow card payments to be routed over at least one network that competes with Mastercard and Visa.

Supporters say the CCCA would give merchants a wider range of choice, such as the option to embrace networks with fees, including interchange (or “swipe”) fees lower than those seen with Mastercard and Visa.

Opponents contend that merchants will not pass those savings along to consumers, while PYMNTS’ Karen Webster argued earlier this year that the CCCA will not reduce merchant interchange fees and will sow confusion for the consumer at the point of sale.