The U.K.’s Payment Systems Regulator will focus a pair of market reviews on the rising card fees charged by Visa and Mastercard.
The regulator will examine whether higher charges levied on merchants are an indication of market failure, according to a statement Tuesday. One review will look at scheme and processing fees on the networks while another will examine cross-border interchange charges — the tolls charged on some overseas transactions.
The reviews will “inform any decisions on the steps we might need to take to promote effective competition or to address any harm,” Natalie Timan, head of strategy at the PSR, said in the statement.
In 2021, there were 21 billion U.K.-issued debit card payments totaling £702 billion ($861 billion) and 3.5 billion credit card payments amounting to £182 billion, according to the lobby group UK Finance. Visa and Mastercard accounted for around 99% of all U.K. debit and credit card payments in 2021, by both volume and value.
The issue of card fees is an increasingly sensitive one in the U.K. after Brexit. Britain’s departure from the European Union removed caps on transactions between the U.K. and the European Economic Area allowing card firms to increase cross-border payment charges. Since the U.K. left the European Union, Visa and Mastercard have increased the interchange fees fivefold, the PSR said.
Last year, Amazon.com threatened to stop accepting purchases made with Visa credit cards issued in the U.K., part of the online retailer’s pushback against transaction tariffs charged by payment networks.
The draft terms of reference for the market reviews are open for consultation until Aug. 2.
