The Payment Systems Regulator (PSR) has recently published an interim report suggesting that card schemes do not face effective competition in the supply of scheme and processing services to acquirers. As cards play an essential role in retail payments for both consumers and businesses, it is crucial for card schemes to be competitive when dealing with merchants and acquirers to create an efficient dynamic between demand and supply.

The main findings of the report In its recently published report, the PSR states that between 2019 and 2024, the two main global card schemes, Mastercard and Visa, have increased their scheme and processing fees by more than 30%, while the quality of service has not increased dramatically. UK businesses don’t really have a choice when it comes to these fees, as the two card schemes count for 95% of all transactions using local issued cards. At the same time, in a cashless economy, non-card payment methods are not yet competitive alternatives for businesses.

The PSR report also found that Mastercard and Visa provide complicated and unclear pricing statements to card acquirers, while the latter cannot access information about fees in an easy way. Moreover, often enough acquirers must handle delays and insufficient notice periods to implement these fees. Acquirers cannot really negotiate these fees either, which makes for card payments to ultimately become a luxury, especially for SMEs.

What does the PSR recommend? To create a healthy competitive background and prevent the monopole of card issuers, the PSR recommends improved transparency for card schemes so that acquirers and businesses can make informative decisions and alternatively switch to different suppliers. Moreover, Visa and Mastercard should have the obligation to explain, consult, and document the reasons why they decide to increase fees and provide the pricing of new services, where applicable. The PSR is currently looking into remedies aimed at providing businesses and acquirers with accurate and relevant information about the card services they use.

The UK regulator also seeks feedback on its interim report from anyone with an interest in the industry of card payments in the UK, until 30 July 2024. .