Visa and Mastercard Accused of Card Monopoly by UK Watchdog

Visa and Mastercard face regulatory action in the United Kingdom following a payments watchdog’s investigation.

The Payment Systems Regulator (PSR) is considering “remedies” for the two companies after uncovering a lack of competition in the card payment market, according to a Thursday (March 6) press release.

“Cards are a popular and convenient way to make payments in the U.K., so any issues in the card market can have a negative impact on … businesses and ultimately consumers,” PSR Managing Director David Geale said in the release. “We have found that there is a lack of competition in the market and evidence that Mastercard and Visa might have been able to charge U.K. businesses millions of pounds more than they would in a properly competitive market, impacting on their ability to invest and grow.”

The findings showed that Visa and Mastercard face “ineffective competitive constraints” in supplying scheme and processing services to acquirers and merchants, the release said. Fees have jumped by at least 25% since 2017, costing U.K. businesses at least an extra 170 million pounds (about $219 million) per year.

The companies have not offered “sufficiently clear and detailed information” on fees, leading to worsening outcomes for merchants and acquirers, especially in terms of raising their costs, per the release.

“They then have little choice but to either pass these increased costs onto consumers or incur the costs themselves, impacting their ability to invest,” the release said.

Mastercard emailed the following statement to PYMNTS:

“We disagree with the findings in today’s report, which continues to underplay the true competitiveness of the payment industry and our ongoing innovation and investment into security and the consumer experience. Our resilient, global network provides peace of mind and strong consumer protections, preventing billions of pounds of fraud each year. We will continue to work transparently with our customers and demonstrate to the PSR the significant value Mastercard and electronic payments bring to people and businesses across the UK.”

Reached for comment by PYMNTS, a Visa spokesperson said the company’s fees reflect the “immense value” the company provides merchants, consumers and financial institutions.

“This includes extremely high levels of security and fraud prevention, near-perfect operational resilience and reliability, and a wide range of consumer protections and high-quality products and services that serve consumer and merchant needs,” the company said. “Through our investments, the U.K. has been a global pioneer in payments technology.”

The PSR’s action came as Mastercard’s and Visa’s place in the marketplace is being called into question elsewhere.

For example, November brought a report that the European Commission was investigating whether the companies’ “scheme fees” were harming retailers.

Also in November, the Senate Judiciary Committee convened a hearing on Visa’s and Mastercard’s fees, with Sen. Dick Durbin of Illinois, then-chair of the committee, accusing the companies of having a “stranglehold” on the credit card market.