The UK’s Payment Systems Regulator (PSR) has published a long-anticipated consultation paper proposing a suite of remedies aimed at improving transparency and accountability in the card fees – scheme and processing – market.
PSR proposed remedies for card fees fall short
But industry stakeholders, particularly UK retailers, have criticised the measures as inadequate, arguing that the proposals fail to address the underlying market dominance of Visa and Mastercard.
The Regulators Report
The regulator’s final report, published earlier this year, found that between 2017 and 2023, the two card giants increased their scheme and processing fees by over 25% in real terms – a change that has translated into an additional £170 million in annual costs for UK businesses.
According to the PSR, these rising costs are typically passed on to consumers through higher prices or result in suppressed investment by merchants.
To tackle these concerns, the PSR’s consultation sets out new obligations on Mastercard and Visa to improve the clarity and accessibility of pricing information provided to acquirers and merchants.
The proposed remedies include stricter rules around pricing governance, mandatory submission of regulatory financial data, and increased publication of key scheme information.
The regulator believes these measures will enable more informed decision-making by businesses and encourage greater scrutiny of card payment costs.
“The proposed remedies we have set out today are a clear way to address the findings in our final report that this market is not working well for businesses and ultimately consumers,” explains David Geale, managing director of the PSR.
“Improving transparency will enable businesses to make informed choices about the card payment services they receive.”
Retail Hits Out
However, the British Retail Consortium (BRC) has responded with sharp criticism, arguing that the consultation is overly cautious and fails to confront the structural issues underpinning high fees.
Chris Owen, the BRC’s payments policy advisor, labelled the regulator’s approach “a failure of vision,” adding that transparency alone will not rein in the market power held by the card networks.
“The PSR must act on its regulatory responsibilities and use its powers to mandate pricing interventions and a longer-term price cap to meaningfully lower fees and bring lasting reform to the market,” Owen said.
“Otherwise, the card schemes will continue to exploit their dominance, and retailers – and their customers – will continue to pay the price.”
The BRC is advocating for the introduction of direct price controls, similar to the regulator’s approach in the cross-border interchange fees market.
They argue that without pricing interventions, UK merchants will remain beholden to opaque and unjustified increases in card costs, exacerbated by the “must-take” nature of cards in the British retail economy.
The consultation remains open until 28 May 2025.
Following this period, the PSR will consider stakeholder feedback before deciding whether to proceed with the proposed remedies and publish a final package of measures.
This comes as the PSR is poised to be integrated into the Financial Conduct Authority later in 2025, part of broader government efforts to consolidate financial regulatory functions.
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