The Payment Systems Regulator (PSR) has told MPs it has seen no evidence to justify recent hikes in fees charged to businesses by Visa and Mastercard, and it may seek additional powers to protect against rising prices.
In response to a letter from the Treasury Committee, the Payment Systems Regulator (PSR) said it had not seen evidence that the costs of operating payment services for card issuers have increased to warrant recent increases in fees.
In October, both Mastercard and Visa increased cross-border interchange fees for debit and credit card transactions, from 0.2% to 0.3% and 1.15% to 1.5% respectively. According to the PSR, the two card companies account for 99% of all card transactions.
Amazon has recently prevented consumers from paying with Visa credit cards as a result of the increased fees.
Scheme fees, which are paid by businesses to card payment operators for use of the service, have also risen substantially, with average fees more than doubling between 2014 to 2018.
In the correspondence, the PSR suggested that, if it becomes apparent that there are no real prospects of improving competition in the market, they would be willing to consider additional regulation to protect consumers and businesses from rising prices.
The PSR also outlined that it intends to finalise its strategy and publish a remedies consultation on their market review in January.
The Treasury Committee will be holding an accountability hearing with the leadership of the PSR on Wednesday 9 March, which will explore the regulator’s role and success in promoting competition within the market and protecting consumers from rising prices.
Commenting on the correspondence, Mel Stride MP, chair of the Treasury Committee, said: “There have been significant increases in the fees businesses have to pay to use debit and credit card facilities in recent times. These impose an additional cost on businesses, many of whom are already hard pressed and facing financial difficulties due to the uncertainties of the pandemic.
“Given that Visa and Mastercard currently dominate this space, it’s vital to ensure that there is sufficient regulation and competition in the market so that businesses are not subject to ever-increasing servicing costs. My committee will be closely following the PSR’s plans to protect consumers and businesses from rising prices, and we look forward to exploring these issues in greater depth when they appear before the Committee in March.”