The Treasury Committee today publishes correspondence on the
increasing cost of card payment services for businesses in the
UK.
In response to a letter from the Committee Chair, the Payment
Systems Regulator (PSR) outline that they have not seen evidence
that the costs of operating payment services have increased for
card issuers to warrant the recent increases in fees.
Interchange fees are paid by businesses to card issuers each time
a card is used by a consumer. In October, both Mastercard and
Visa increased cross-border interchange fees for debit and credit
card transactions, from 0.2% to 0.3% and 1.15% to 1.5%
respectively. According to the PSR, the two card companies
account for 99% of all card transactions.
Amazon has recently prevented consumers from paying with Visa
credit cards as a result of the increased fees.
Scheme fees, which are paid by businesses to card payment
operators for use of the service, have also risen substantially,
with average fees more than doubling between 2014 to 2018.
In the correspondence, the PSR suggest that, if it becomes
apparent that there are no real prospects of improving
competition in the market, they would be willing to consider
additional regulation to protect consumers and businesses from
rising prices.
The PSR also outline that they intend to finalise their strategy
and publish a remedies consultation on their market review in
January.
The Committee will be holding an accountability hearing with the
leadership of the PSR on Wednesday 9 March, which will explore
the regulator’s role and success in promoting competition within
the market and protecting consumers from rising prices.
Chair's comment
Commenting on the correspondence, Rt. Hon. MP, Chair of the Treasury Committee, said:
“There have been significant increases in the fees businesses
have to pay to use debit and credit card facilities in recent
times. These impose an additional cost on businesses, many of
whom are already hard pressed and facing financial difficulties
due to the uncertainties of the pandemic.
“Given that Visa and Mastercard currently dominate this space,
it’s vital to ensure that there is sufficient regulation and
competition in the market so that businesses are not subject to
ever-increasing servicing costs. My committee will be closely
following the PSR’s plans to protect consumers and businesses
from rising prices, and we look forward to exploring these issues
in greater depth when they appear before the Committee in March.”
