The PSR has published the final report in its market review into card scheme and processing fees, concluding that the current market is not working well for card scheme and processing services.
Key takeaways from the report were:
- Mastercard and Visa increase their core scheme and processing fees to acquirers by at least 25% since 2017 in real terms, costing businesses at least £170m extra annually, with the providers subject to ‘ineffective competitive constraints’;
- Fees have risen substantially in recent years, with no clear evidence that this increase has been made on the basis of detailed cost analysis, competition or innovation:
- While the PSR was not able to reach a firm view on levels of profit, it found evidence in both Mastercard and Visa UK’s profit that was consistent with margins higher than would be expected in a well-functioning market; and
- A lack of easy-to-understand fee information has led to costs for acquirers and merchants, including small retailers.
The PSR will consult in due course on potential remedies to address these issues.