The Payments Systems Regulator (PSR) has set out its plans to carry out a market review into card-acquiring services and has published draft terms of reference for consultation.

PSR says card payments are critical to the smooth running of the UK economy. They are a popular way for consumers to pay merchants for goods and services, and their use is growing. In the UK in 2017, 13.2 billion payments were made by debit card and an additional 3.1 billion in payments by credit card. In the same year, for the first time debit cards became the most frequently used payment method.

For merchants to accept card payments, they need to buy card-acquiring services. The costs merchants incur for such services may ultimately be reflected in the prices they charge and services they offer to their customers.

The PSR is proposing to carry out this market review having taken into account the concerns that have been brought to its attention. The regulator wants to ensure that the supply of card-acquiring services is competitive and works in the interests of merchants, and ultimately consumers.

The draft terms of reference set out the PSR’s proposed approach to the market review, which includes looking at:

  • the nature and characteristics of card-acquiring services;
  • who provides card-acquiring services and how their market shares have developed historically;
  • how merchants buy card-acquiring services;
  • whether there are credible alternatives to card-acquiring services for some or all merchants;
  • the outcomes of the competitive process including the fees merchants pay and the quality of service they receive.

Hannah Nixon, Managing Director of the Payment Systems Regulator, said “With more and more of us using our payment cards to make purchases, we want to make sure that retailers that accept card payments can access card-acquiring services that are competitive, offer value for money and are innovative – working in both their interests, and consumers’ interests too. This is about making sure that payment systems work well for everyone, and we will look to make changes if we think improvements should be made.”

The draft terms of reference for the market review is open for consultation until 14 September 2018. The regulator is interested to receive feedback on the draft terms of reference, in particular the consultation questions and welcomes any evidence in support of submitted views.