PSR to review post-Brexit Visa and Mastercard fees

22nd June 2022

The Payment Systems Regulator (PSR) has announced that it will conduct two market reviews of card fees charged by Visa and Mastercard. 

The first review will look at why there was a fivefold post-Brexit increase in the cross-border interchange fee that Mastercard and Visa charged retailers for consumer purchases by phone or online in the European Union, the watchdog said. 

The second review is into fees for services that allow retailers to accept card payments.

Cross-border interchange fees have also increased significantly in the last year. This affects fees for certain card transactions between the UK and the EEA, where the cardholder is not present (such as payments made by phone or online). Since the UK left the EU, Visa and Mastercard have increased these fees five-fold. The PSR wants to understand the rationale behind these increases and whether they are an indication that the market is not working well.

Natalie Timan, Head of Strategy at PSR, said “Cards are the most popular way for consumers to make a payment. To accept card payments, merchants must pay certain fees which can ultimately impact the cost we all pay for goods and services. We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal.”

“We’ve been gathering information since the start of this year and have identified that a detailed review of the market is needed. We have set out what we will assess in these reviews, which will then inform any decisions on the steps we might need to take to promote effective competition or to address any harm.”

The draft terms of reference for the market reviews are open for consultation until Tuesday 2nd August. The PSR 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. During the consultation period the PSR will also be running series of engagement events and will be encouraging stakeholders to take part to help shape the scope of the reviews.