The UK’s Payments Systems Regulator (PSR) has launched an investigation into card acquiring services and whether Britain’s big banks and payments specialists such as Worldpay and Wirecard have taken advantage of a lack of competition to overcharge smaller businesses and prevent them from moving to alternative service providers.
The PSR said it was concerned that some retailers “are suffering significant harm because competition in the supply of card-acquiring services is not working well”. Card acquirers have become increasingly essential for retailers as consumers have moved away from cash payments in recent years.
In 2017 debit cards overtook cash as the most frequently-used payment form in the UK, and the trend is forecast to accelerate further. However, retailers that wish to accept card payments have to pay acquirers a fee for every transaction to gain access to Visa and Mastercard’s networks, along with additional monthly charges to hire card terminals or to accept payments online.
EU rules introduced in 2015 capped the interchange fees that card issuers could charge acquirers, but did not force acquirers to pass the savings on to merchants. The PSR said that “the harm to smaller merchants from acquirers holding on to the benefits of the IFR interchange fee caps could be significant”.
The regulator said it would also be looking into broader issues in the card-acquiring business, including a lack of transparency around fees and whether firms have made it too difficult for retailers to compare between and switch to different acquirers.
“With more and more of us using our payment cards to make purchases, we want to make sure that retailers that accept card payments can access card-acquiring services that are competitive, offer value for money and are innovative — working in both their interests, and consumers’ interests too,” says Hannah Nixon, PSR managing director.
“This is about making sure that payment systems work well for everyone, and we will look to make changes if we think improvements should be made.”