Businesses paying an additional £170m in card fees as competition falters

The Payment Systems Regulator (PSR) has found significant issues within the UK market for card scheme and processing services, identifying a substantial increase in fees and a lack of clear information.

In its final report of its card scheme and processing fees market review, the PSR found that Mastercard and Visa have increased their core scheme and processing fees to acquirers by 25% since 2017, costing businesses at least £170 million extra per year.

The PSR also found that a lack of easy-to-understand fee information has led to costs for acquirers and merchants, including small retailers.

The review found that between 2017 and 2023, Mastercard and Visa raised their core scheme and processing fees by more than 25% in real terms. The regulator also found that the schemes do not provide sufficiently clear and detailed information to acquirers or merchants, resulting in them receiving complex or incomplete information on scheme and processing services and fees, raising both acquirers’ and merchants’ costs and preventing them from negotiating a better deal. As a result of its findings, the PSR will shortly consult on potential remedies to address the issues.

David Geale, the PSR’s Managing Director, said “Cards are a popular and convenient way to make payments in the UK, so any issues in the card market can have a negative impact on both businesses, and ultimately consumers.

“We have found that there is a lack of competition in the market, and evidence that Mastercard and Visa might have been able to charge UK businesses millions of pounds more than they would in a properly competitive market, impacting on their ability to invest and grow. The confusing information Mastercard and Visa make available to acquirers and merchants contributes to poorer market outcomes through raising their costs of dealing with this overly complex information.

“We will shortly consult on potential remedies to address the issues we have identified in our final report before we take any corrective action. We look forward to engaging with parties as part of this process”