The Payment Systems Regulator (PSR) has today announced that it plans to carry out a market review into card-acquiring services, and has published draft terms of reference consultation.
Card payments are pivotal to the smooth running of the UK economy, proving to be a popular way for consumers to pay merchants for goods and services. In 2017, 13.2 billion payments were made by debit card and a further 3.1 billion payments by credit card across the UK. In the same year, debit cards became the most frequently used payment method for the first time.
In order to allow merchants to accept card payments, they must purchase card-acquiring services. The costs merchants incur for such services could ultimately be reflected in the prices they charge and services offered to their customers.
The PSR is proposing to carry out this market review after taking into consideration 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 regulator’s proposed approach to the market review, and involve 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, and the outcomes of the competitive process including the fees merchants pay.
Commenting on the plan, PSR managing director Hannah Nixon 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 PSR has said that it is interested in feedback on the draft terms of reference; in particular the consultation questions, and welcomes any evidence in support of submitted views.
British Retail Consortium payments and consumer credit policy adviser Andrew Cregan welcomed the "much-needed" review into card payments in the UK.
He said: "We’re continuing to make the case for measures to tackle the alarming increase in card fees and charges at a time when the retail industry is facing acute cost pressures elsewhere. Retailers spend £1.1bn on accepting payments of one kind or another every year - the vast majority of which goes to the card payments industry - and our research shows card scheme fees are spiralling, which inevitably pushes up costs for ordinary shoppers. We’ll be working in partnership with the PSR to ensure we’ve got a card market that supports the retail industry’s technologically-driven future."
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