PSR Takes Bold Action Against Card Schemes Amidst 25% Fee Surge
The recent market review conducted by the Payment Systems Regulator (PSR) has revealed significant insights into the fee structures of major payment processors, Mastercard and Visa. Between 2017 and 2023, these companies raised their core scheme and processing fees by over 25% in real terms, a move that has raised concerns among merchants and acquirers alike.
Key Findings of the PSR Review
The PSR’s investigation highlighted several critical issues regarding the transparency of fees and services provided by Mastercard and Visa. Here are the main findings:
- Mastercard and Visa lack clear and detailed information for acquirers and merchants.
- Complex and incomplete information has resulted in higher operational costs for businesses.
- The regulator observed signs that the profit margins of these schemes are higher than expected in a competitive market.
Regulatory Response and Recommendations
In light of these findings, the PSR opted not to impose immediate financial penalties but instead recommended a series of remedies aimed at enhancing transparency. These include:
- Mandating Mastercard and Visa to clarify and document reasons behind price changes.
- Ensuring that businesses receive comprehensive information about new services and their associated costs.
- Providing more detailed financial disclosures to the PSR in the future.
David Geale, the PSR’s managing director, commented on the implications of the findings: “The lack of competition in the market suggests that Mastercard and Visa may have charged UK businesses significantly more than they would in a truly competitive environment. This situation hampers their potential for investment and growth.”
Visa’s Response to the Review
In response to the PSR’s findings, a spokesperson for Visa defended the company’s fee structure, stating: “Visa’s fees reflect the immense value we provide to financial institutions, merchants, and consumers. Our services include high levels of security and fraud prevention, robust operational resilience, and a variety of consumer protections.”
The spokesperson emphasized that Visa’s investments have positioned the UK as a global leader in payment technology, underscoring the company’s commitment to delivering quality services to its clients.
Next Steps for Stakeholders
The PSR plans to consult further on potential remedies identified in their final report, ensuring stakeholder engagement throughout the process. This initiative aims to foster a more competitive environment in the payment processing market, ultimately benefiting both merchants and consumers.
For further information on payment systems and regulatory updates, visit the Payment Systems Regulator website.
