Mastercard and Visa face crackdown by UK regulator over merchant fees

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Visa and Mastercard will be required to share more information about the fees they charge merchants under new rules proposed by the UK’s payments regulator.

The payments systems regulator proposed on Tuesday that the two companies, which account for 95% of all debit and credit card payments in the UK, should regularly disclose financial information to the regulator. management and consult with sellers and retailers before changing fees.

The proposal comes after the PSR found that while card networks have increased program and processing fees by more than 30% in real terms over the past five years, there is “little evidence of service quality.” Services have improved at a similar level. ”.

Passport and Mastercard charges merchants fees for access to its network and various processing fees for authorization, clearing and settlement.

Unlike interchange fees that go to the bank, program and processing fees go directly to the card network. These fees have historically been subject to less scrutiny than interchange fees because they represent a smaller portion of the fees charged to merchants.

Chris Hemsley, chief executive of PSR, said: “Every time someone uses a Mastercard or Visa, UK businesses pay a fee. “These fees have increased significantly in recent years and that increase cannot be explained by improvements in service quality.”

Other proposed changes include requiring card networks to disclose pricing practices.

Hemsley said there were concerns about the transparency and quality of information provided by the network, with the PSR’s assessment suggesting “the market is not performing well”.

PSR’s proposal is the latest effort to loosen Visa’s control and Master Card on the payments sector, following complaints about fees from merchants and retailers, and calls for more competition.

Trade bodies including the British Retail Consortium and the Federation of Small Businesses have called on PSR to reduce card fees with their “Axe the Card Tax” campaign.

Visa and Mastercard said the fees reflect the value of their services which in recent years have been strengthened by investments in cybersecurity and cyber resilience.

Mastercard said it disagreed with the findings and argued that “the payments industry has never been more competitive” while the PSR analysis “does not take into account the significant investment required to provide a secure network.” “to prevent fraud.”

It also pointed to a Boston Consulting Group report from 2021 that estimated its program fees across Europe were equivalent to 6p for a £50 transaction.

The company added that it will “continue to work transparently with PSR” to demonstrate the value it brings to the UK economy.

Visa says its fees “reflect the tremendous value we provide to financial institutions, merchants and consumers, including extremely high levels of security, resilience near-flawless operations as well as a wide range of consumer protection measures and high-quality products and services for consumers. and the needs of traders.

A parallel PSR inquiry into exchange fees last year called for the cap to be reintroduced about cross-border transaction feeswas removed after the UK left the EU.

In the UK, Mastercard faces one class action lawsuit claimed that the exchange rates they charged from 1992 to 2008 were passed on to consumers through higher prices by stores and businesses. ‎

In the US, Visa and Mastercard this year agreed to reduce transaction fees $30 billion settlement of antitrust lawsuit brought by merchants.


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