The Payments System Regulator (PSR) has published details of two market reviews focusing on card fees. One looks at scheme and processing fees, and the other at cross-border interchange fees. The reviews focus on Mastercard and Visa as these two card payment system operators account for 99% of credit and debit card payments in the UK.
On scheme and processing fees, the PSR is carrying this review because its card-acquiring market review (CAMR) found that the fees paid by acquirers had increased significantly from 2014 to 2018. Further feedback from stakeholders also highlights that scheme fees have continued to increase since then.
The PSR wants to understand whether the markets in connection with scheme and processing fees are working well. In particular, this market review will examine the levels, structure and types of scheme and processing fees, and builds on the PSR's CAMR findings.
In addition, the PSR notes that cross-border interchange fees have also increased significantly in the last year. This affects fees for certain card transactions between the UK and EEA, where the cardholder is not present (such as payments made online or by phone). Since the UK left the EU, Visa and Mastercard have increased these fees five-fold. The PSR wants to understand the rationale behind these increases and whether they are an indication that the market is not working well.
The draft terms of reference for the market reviews are open for consultation until 5pm on Tuesday 2 August. The PSR is interested to receive feedback on these along with any evidence in support of submitted views. During the consultation period, the PSR will be running a series of engagement events and will be encouraging stakeholders to take part and help shape the scope of the reviews.