Visa and Mastercard face UK regulatory action over lack of competition

Visa and Mastercard have faced UK regulatory action over lack of competition, as card duopoly’s sharp fee increases are costing businesses GBP 170 million extra a year.

Following this announcement, the PSR has warned Visa and Mastercard that it will take action in order to tackle the lack of competition and transparency in the card payments markets, as it currently costs British businesses GBP 170 million a year.

According to the Financial Times, both Visa and Mastercard account for 95% of all debit and credit card payments in the UK, and they have increased the fees they charge merchants and businesses by 25% above inflation since 2017.

More information on the PSR’s warning towards Visa and Mastercard

The plan is set to impose a certain set of remedies on the card providers in order to loosen the grip of Visa and Mastercard on the payment sector, as there were multiple complaints made about the fees from merchants and retailers. At the same time, businesses called for more competition in the market, as the PSR also found evidence that Mastercard and Visa might have been able to charge UK businesses millions of GBP more than they would in a properly competitive landscape.

RSP also mentioned that its review of the card payments market found Visa and Mastercard guilty of not providing sufficiently clear and detailed information to acquirers and businesses, a process which resulted in them receiving complex or incomplete information on scheme and processing fees and solutions. At the moment, Visa and Mastercard charge fees to sellers for access to their network and several processing fees for the autorisation, clearing, and settlement payment processes.

The regulator did not specify the potential remedies it plans to apply to Mastercard and Visa, but its strategy includes imposing caps on fees. Previously, RSP also considered forcing the card networks to disclose their pricing methodologies in an overall effort to foster transparency. Mastercard and Visa disagreed with the regulator’s finding, mentioning that their scheme and processing fees are a reflection of the value of their services, which have been strengthened by investment in network resilience and cyber security.