UK regulator opens door to credit card reporting mandate

Higher fees charged across the Atlantic payments network are not translating into better service, a new report shows.

The U.K.'s Payment Systems Regulator (PSR) released a 158-page report on Tuesday (May 21), which found that U.S. companies Visa and Mastercard had charged acquirers and issuers $100,000 in fees over the past five years. added, “This cannot be explained by changes in payment methods.”

The report considers a range of actions and possible remedies – which, we note, does not include a cap, at least for now.

As these fees rise, UK businesses are paying more than “£250m” a year for credit card acceptance, PSR estimates, largely because “Mastercard and Visa account for 95% of transactions using UK-issued cards,” the regulator said. the agency wrote.

one stop shop

The market reality, the report says, is that with the current core solutions and processing services landscape, payments giants “will not face direct constraints from alternative providers… as Mastercard and Visa can provide a one-stop shop for core and optional services solutions, the report says they are in a better position than other alternative service providers.

“The evidence we gathered is consistent with the finding that Mastercard and Visa's profit margins are higher than what would be expected in a competitive market. However, we do not have enough data to draw conclusions about whether there are excessive prices or excessive profits (and draw clear conclusions about the extent of the resulting harm) and note the wide range of possible profits,” the regulator charged.

For payment networks, they believe that service quality has indeed improved, with responses to PSR details (in the case of Mastercard) enhancing chargeback and dispute resolution processes. Both networks told PSR that open banking, buy now pay later (BNPL) and digital wallets all offer competition, which is highlighted by the wide range of payment methods and options available to users. Additionally, large tech companies could develop in-house processing capabilities to provide payment card alternatives.

In response to a request for comment from PYMNTS on Tuesday, a Mastercard spokesperson said, “We disagree with the findings of the PSR midterm review. Competition in the payments industry has never been more fierce, and this is reflected in the variety of payment methods available to UK consumers and businesses.” Speech People added: “In its analysis, the PSR failed to take into account the significant investment required to provide a secure network to prevent billions of pounds of fraud every year… We will continue to work with the PSR transparently and demonstrate that Mastercard The huge value electronic payments bring to the UK economy.

Separately, Visa told PYMNTS via email that “Visa’s investment in reliable, secure and innovative digital payments means everyone in the UK can buy and sell with confidence,” adding that “this will drive economic growth.”

What's on the desktop

As for the cap, PSR added, “If we had access to more accurate information, we would be able to make a more accurate and robust assessment of the damage and, where appropriate, seek remedies to address our concerns on a more direct basis.” . Such remedies may include price caps or some form of price controls, which we do not currently consider.

Actions being discussed include: The PSR said it is considering requiring card schemes to provide ongoing provision of their UK financial information and performance, which would require card schemes to prepare reports containing profit and loss and balance sheet information.

The regulator wrote that such mandatory reporting “will take time to get right and may require investment and changes to the credit card scheme's processes.” Additionally, UK pricing decisions may be made within “governance structures including the UK Pricing Council or subcommittees.” Made next.

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