Visa and Mastercard will have to disclose more details about the fees they charge merchants under new rules proposed by the UK payments regulator.
The Payment Systems Regulator (PSR) proposed that Visa and Mastercard, which dominate 95% of all debit and credit card payments in the UK, should regularly share financial data with the regulator. Additionally, they should consult merchants and retailers before adjusting their fees.
The proposal follows the PSR's findings that the card networks raised their scheme and processing fees by over 30% in real terms over the last five years, with limited evidence of corresponding service quality improvements.
Visa and Mastercard levy fees on sellers for network access and various processing activities like authorisation, clearing, and settlement of payments.
Unlike interchange fees, which are passed on to banks, scheme and processing fees are received directly by the card networks. Historically, these fees have faced less scrutiny compared to interchange fees as they constitute a smaller portion of the total charges borne by sellers.
"Whenever a Mastercard or Visa card is used, UK businesses incur fees," stated PSR's Managing Director Chris Hemsley. "These fees have risen substantially in recent years, with no corresponding improvement in service quality to justify the increases."
