The Payment Systems Regulator (PSR) has published its initial remedies consultation for its card-acquiring market review.
Every time somebody makes a card payment – for example, when buying their weekly groceries – the merchant uses card-acquiring services to accept the payment. These services are critical to the UK economy because they enable consumers and businesses to use their cards to pay for goods and services.
The PSR’s review published in November found that the supply of card-acquiring services does not work well for merchants with annual card turnover up to £50 million. These merchants could make savings by shopping around or negotiating with their current supplier, but many do not.
Today’s publication sets out proposals to improve services and choice for merchants. To make sure the market works better for merchants, the PSR is considering the following four potential remedies:
- Greater transparency: to help merchants understand the pricing elements of any services they use, card-acquirers should provide summary information boxes setting out key price and non-price service elements of card-acquiring services. These should be in both bespoke form and published with general information in generic format.
- Access to comparison tools: like price comparison websites, the PSR wants the industry to help stimulate Digital Comparison Tools (DCTs) for merchants so they can see whether they are getting the best deal.
- Greater engagement: to help merchants know when their contracts are due for renewal, there needs to be an agreed standard of messaging by providers that will help merchants understand that their contract is due for renewal and the terms of the contract on an annual basis.
- The ability to change providers easily: the PSR wants to address barriers to switching between card-acquiring services, which arise from Point of Sale (POS) terminal leases, by looking at potential options for merchants to switch without incurring undue cost or suffering inconvenience from having to also exchange their POS terminal. This may include the replacement of terminals by POS terminal lease providers for instance.
Genevieve Marjoribanks, Head of Policy at the PSR said:
“Cards have continued to be the payment method of choice for the majority of consumers, with 15.5 billion debit card payments made in 2020.1 The role card-acquiring services play is vital in enabling merchants to accept these card payments.
“In our recently published strategy, we highlighted our focus on competition in payments. This work ties directly into our strategy because the proposed remedies will help merchants find the best deals to use card-acquiring services at the most competitive tariffs for them – and give greater transparency to merchants in what can sometimes be a complicated area, particularly for smaller merchants.”
The PSR is seeking feedback on its proposed remedies and also invites industry to develop and submit detailed specifications for the potential remedies discussed, as well as any alternative suggestions. The close date is 6 April 2022. The PSR will consider the responses to this initial consultation before deciding whether these remedies are the best way to address the features of concern, or if other intervention is needed.
It plans to issue a provisional decision and draft remedies notice, and a final remedies notice later this year.