UK Payment System Regulator PSR Relaxes Its Penalties on Visa and Mastercard
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United Kingdom’s Payment System Regulator (PSR) has stopped its plans to impose financial penalties on Mastercard and Visa for their processing fees scheme. This is coming even when there is evidence that both companies operate an effective duopoly when supplying services to merchants.
The market review for the regulator into the processing fees and card scheme showed no proper competition between these two significant schemes raising prices. The review also noted that their service supply to merchants is “not working well.”
PSR Says Visa And Mastercard Increased Their Fees Without Improving Quality Of Service
The PSR discovered that Visa and MasterCard have increased their processing fees over the past five years by over 30% in real terms. “There is little evidence that the quality of service has improved at the same rate,” the PSR added.
The increased fees mean merchants in the UK have to pay the additional fees since Visa cards and Mastercard control over 95% of card-based transactions in the country. Most merchants do not see a non-card payment option as a competitive business alternative.
PSR also stated that there was evidence that Visa and Mastercard offer cardholders unclear and complicated pricing statements. Also, cardholders need help accessing details about the fees. Additionally, the regulator stated that the two firms must provide efficient notice periods before implementing their fees.
The PSR Trades Softly With Mastercard and Visa
While the PSR has pointed out the lapses of both companies, the regulator is not taking any decisive action against them. Instead, it suggests a series of remedies that Mastercard and Visa should implement to solve the issue.
The firms have been advised to improve cost transparency, which will provide information about their fees. The goal is to protect the interests of the merchants who are seemingly being exploited with high fees.
The watchdog is obligating Visa and Mastercard to consult and explain why there are changes in the fees. They should also provide more information to the regulator about their merchant fees.
However, both Visa and Mastercard deny the accusations of price-gouging, stating that they are carrying out several operations in their networks to fight fraud and ensure operational efficiency.
While both companies are still bossing the market, the PSR actively seeks to unlock the frequent use of account-to-account payments.
