UK Payments Regulator to Launch Review on Visa and Mastercard Fees

The United Kingdom’s Payment Systems Regulator (PSR) is seeking a pair of market reviews on the rising card fees charged by two of the industry leaders, Visa and Mastercard. Both these companies account for 99 percent of Britain’s debit and credit payments market.

Announced on Tuesday, one of the reviews looks into scheme and processing fees, while the other at cross-border interchange fees.

“Cards are the most popular way for consumers to make a payment. To accept card payments, merchants must pay certain fees which can ultimately impact the cost we all pay for goods and services,” said Natalie Timan, the Head of Strategy at PSR.

“We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.”

A Growing Industry

According to the statistics of lobby group UK Finance, there were 21 billion UK-issued debit cards and 3.5 billion credit cards at the end of 2021. The payments made by these debit cards totaled £702 billion ($861 billion) and credit cards at £182 billion.

Meanwhile, the fees paid by acquirers also increased significantly between 2014 and 2018. Additionally, the fees charged by Visa and MasterCard have increased five-fold after the UK’s exit from the European Union bloc, according to PSR.

Now with the market reviews, the UK regulator wants to understand the rationale behind these increases in fees. In addition, it wants to determine whether it is an indication of an improper market.

“We've been gathering information since the start of this year and have identified that a detailed review of the market is needed,” Timan added. “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."