In July this year, as part of its market review into the supply of card-acquiring services, the PSR published a consultation
on its proposed approach to the profitability analysis.
This consultation explained the regulator’s proposed approach to assessing the profitability of card-acquiring services and set out two proposed pieces of analysis:
- Gross Profit Margin (GPM), and
- Return on Capital Employed (ROCE).
The consultation closed in August and the regulator has reviewed the responses received. The PSR is providing this update because, having considered the benefits of each of the two pieces of analysis, it has concluded that GPM is more likely to provide useful analysis for its review and it therefore won’t be assessing ROCE.
Overall, the PSR believes that ROCE will be more complex and require significantly more resources for little incremental benefit to its review.
The PSR is confident that GPM, when taken with the other evidence it is gathering in the review, will enable it to understand whether the supply of card-acquiring services is working well for merchants, and ultimately consumers.