Regulators Announce Their Plans to Examine UK Card Services

Wednesday, September 19th, 2018

Britain’s official payment watchdog group, the Payments Systems Regulator (PSR) is holding banks under a microscope. The PSR announced that the aim of their in-depth review of how banks’ process card transactions on merchant’s behalf is to reveal whether or not customers are getting a good deal.

In a blog post, the PSR explained that “Stakeholders have raised concerns with us that indicate the supply of card-acquiring services may not be working well for merchants and, ultimately, consumers. Our market review is prompted by these concerns.”

Card payments are critical to the success of the U.K. economy. They are the most popular way for consumers to pay for goods and services, and their use continues to grow. The concern is that banks might be routinely overcharging for acquisition services; most acquiring is done by big banks that charge merchants to accept cards and process payments.

In the end, this could have a negative impact on the UK economy. The PSR’s review of the acquisition services market in the UK should determine how much of the costs are trickling down to the consumers; that is, just how much of the chosen merchants’ banking services are consumers really paying for.

“The costs merchants incur for such services may ultimately be reflected in the prices they charge and services they offer to their customers,” the PSR said in a statement.

CEO of the Association of Convenience Stores (ACS), James Lowman, shared his belief that this review is the next logical step forward in protecting businesses, especially small businesses, from the high costs and necessity of accepting cards.

“The cap on interchange fees for card transactions was a welcome step forward, but we remain concerned about whether this cap is being passed on to retailers, who also have to deal with the increasing cost of card scheme fees, which are unregulated,” Lowman explained to local media.

He went on to say that “We welcome this review, and encourage the Payment Systems Regulator to look closely at all the fees paid by retailers to allow them to offer card payment facilities to their customers.”

According to Reuters, the use of cards to buy gods and services was the most frequently-used payment method in the U.K. in 2017. Considering consumers’ ever-growing use of this payment option, the PSR is now taking public input on the proposed changes.

“The regulator wants to ensure that the supply of card-acquiring services is competitive and works in the interests of merchants and, ultimately, consumers,” the PSR noted in Reuters.

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