Payment Systems Regulator finds Mastercard and Visa raised core UK card scheme and processing fees by at least 25% and will consult on remedies

The Payment Systems Regulator (PSR) published its final report on card scheme and processing fees, concluding that Mastercard and Visa face ineffective competitive constraints in the UK and increased core scheme and processing fees to acquirers by more than 25% in real terms between 2017 and 2023. The PSR estimates these increases have cost businesses at least GBP 170 million extra per year and found that fee opacity is contributing to higher costs for acquirers and merchants, including small retailers. The review found no clear evidence that new fees are set on the basis of detailed cost analysis, competition or innovation. While the PSR did not reach a firm view on the level of the schemes’ profits, it identified evidence in their UK profits consistent with margins being higher than would be expected in a well-functioning market. Mastercard and Visa were also found to provide insufficiently clear and detailed fee information, leaving acquirers and merchants with complex or incomplete information that raises their costs and limits their ability to negotiate, with merchants often having to pass higher costs on to consumers or absorb them. The PSR said it will shortly consult on potential remedies to address the issues identified in the final report before taking any corrective action.