Mastercard and Visa process about 99 per cent of debit and credit card payments in the UK, by volume and value.
“Since the UK left the EU, Visa and Mastercard have increased these fees five-fold,” the watchdog has said, referring to an element of cross-border fees that caused concern among MPs and consumers when the changes were revealed last year.
The UK’s Payment Systems Regulator will now probe the card charges imposed by Visa and Mastercard, focusing on the post-Brexit jump in processing fees and cross-border transaction levies.
According to the watchdog it was seeking to “understand the rationale behind these increases and whether they are an indication that the market is not working well”.
The cap on transaction fees between the UK and Europe was removed after Britain left the EU, which permitted card operators to increase cross-border payment charges.
Mastercard and Visa levy an “interchange” fee on behalf of banks for every debit or credit card payment that uses their networks. The EU introduced a cap in 2015 after concerns that the hidden fees were leading to hundreds of millions of euros in costs for companies and higher prices for consumers.
But Mastercard last year told merchants the cap no longer applied to some transactions post-Brexit, as payments between the UK and the European Economic Area were now deemed “interregional”. This alarmed companies that rely on online payments and concerned MPs over higher consumer prices.
