Watchdog set to review fees charged by Visa and Mastercard
The UK’s top payments regulator has set out plans for two wide ranging reviews of Visa and Mastercard’s operations in the UK today amid concerns over soaring card fees.
The Payment Systems Regulator (PSR), which oversees the way that payment systems work in the UK, has launched plans for two major reviews of card systems looking at scheme and processing fees, and cross-border interchange fees.
Mastercard and Visa’s dominance in the market mean that the reviews will focus largely on their operations, the regulator said today.
The PSR’s fresh reviews come after the watchdog found in January that card acquiring fees – the amount that merchants pay to pay for services needed to accept card payments – had “increased significantly from 2014 to 2018”.
Bosses at the PSR said they had launched the reviews to ensure that merchant and 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,” Natalie Timan, Head of Strategy at PSR, said.
“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.”
Cross-border interchange fees are also set for scrutiny by the regulator after surging in the past year amid hiked transaction fees caused by Brexit.
Mastercard and Visa fees for certain card transactions between the UK and the EEA including payments made by phone or online, have increased five-fold since the UK left the EU, the PSR said today.
Mastercard was also among five companies handed fines of more than £33m in January after it was found to have infringed on competition law by the PSR for agreeing not to compete for other firms’ customers.
Visa and Mastercard have also come under fire from retail and consumer groups in the past two years for cashing in with “excessive fees” during the covid pandemic.
In 2020, bosses at the British Retail Consortium said the firms were abusing their dominant position in the market.
“They’re two of the most profitable organisations in the world and they’ve got merchants over a barrel,” the BRC’s Andrew Cregan said in 2020.
A Visa spokesperson said today: “Visa continues to be one of the most cost-effective and secure ways to pay and be paid and we remain committed to offering consumers and businesses in the UK access to innovative, easy, reliable and secure digital payments.
“We’re proud to be part of a thriving, competitive and dynamic UK payments industry and we look forward to continuing a constructive dialogue with the PSR.”
Mastercard has been contacted for comment.