Businesses across the UK will benefit from greater transparency over the card fees they pay, after the Payment Systems Regulator (PSR) confirmed new requirements on Mastercard and Visa. The measures follow the PSR’s market review of card scheme and processing fees.

Card scheme and processing fees are paid by businesses to accept card payments – and these costs are ultimately covered by consumers through prices they pay for goods and services. Until now, acquirers have often found these fees to be difficult to understand, and difficult to reconcile with the schemes’ billing – all in the context of fees rising well ahead of inflation in recent years.

The PSR has issued today a direction requiring Mastercard and Visa to make significant changes to how they operate in the UK. They must provide their clients – known as acquirers – with much clearer information about every fee they are charged: what it is, how it is triggered and how it is calculated. This will make it easier for businesses to check their bills, avoid unnecessary charges and shop around for better deals on optional services. That could mean those savings can be passed on to consumers.

In its market review, the PSR also found that there was a lack of transparency in Mastercard and Visa internal processes about how pricing decisions were made. In response, the second (Pricing Governance) direction issued today requires Mastercard and Visa to consider the interests of the businesses that rely on their services when making pricing decisions and keep clear records of their reasoning.

David Geale, managing director of the Payment Systems Regulator said:

“These measures will improve transparency around card scheme and processing fees, make it easier for acquirers to reconcile charges, and strengthen accountability for Mastercard and Visa’s pricing decisions. Following consultation, we have refined the remedies to ensure they are proportionate, effective and deliver lasting market benefits.”

The Pricing Governance remedy will take effect within four months. The requirements to provide clearer information to acquirers will be implemented over 12 months, reflecting the operational changes required to Mastercard and Visa’s systems.

The PSR has also confirmed it is progressing work on a further measure to ensure greater scrutiny of the schemes in the UK: Regulatory Financial Reporting. This will require Mastercard and Visa to report to the PSR on the financial performance of their UK card businesses. This will give the regulator a much clearer picture of fee trends and overall profitability, enabling it to act swiftly if further intervention is needed to protect the market. 

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