The UK's Payments Systems Regulator is to conduct a market review into the card acquiring market in the wake of retail industry complaints about spiraling fees and ineffective competition.
In the UK in 2017, 13.2 billion payments were made by debit card and an additional 3.1 billion payments by credit card. In the same year, for the first time debit cards became the most frequently used payment method.
The PSR says the review will explore whether the supply of card-acquiring services is competitive and works in the interests of merchants, and ultimately consumers.
In particular, it will address concerns that acquirers are holding on to the savings they made from EU-imposed IFR interchange fee caps, which could indicate that some merchants - especially smaller merchants - are suffering "significant harm" because competition in the supply of card-acquiring services is not working well.
Hannah Nixon, managing director of the Payment Systems Regulator, says: “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. 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 news has been welcomed by retail industry bodies.
Andrew Cregan of the British Retail Consortium says: “ 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.”