By Huw Jones
LONDON (Reuters) -There is little evidence that large fee increases imposed on retailers by U.S. duo Visa (NYSE:) and Mastercard (NYSE:) have led to a major improvement in service, Britain’s Payment Systems Regulator said on Tuesday. identifying concerns about competition. did not work.
Visa and Mastercard have long dominated the payment card market, prompting UK lawmakers to call for further scrutiny by the PSR as consumers ultimately pay the costs through higher prices for products and services purchased.
Efforts in Europe to create homegrown rivals have failed as banks hesitate over investment costs. A report commissioned by the British government last year said Britain needs a “digital alternative” to the two US payment processing networks.
“The PSR found that over the past five years, and taking into account volume changes, Mastercard and Visa have increased their system and processing costs by more than 30% in real terms. There is little evidence that the quality of service has improved at this time. the same rate,” the PSR said in a statement outlining its preliminary findings.
Cards are the most popular payment method in Britain, with 27.1 billion transactions in 2022 worth £954 billion.
The PSR’s 158-page interim report estimates that the tariff increases have added more than 250 million pounds ($317.78 million) annually to costs for British businesses.
British businesses have little choice but to pay these higher fees as Mastercard and Visa cards account for 95% of transactions on UK-issued cards, the PSR said.
“There is currently no effective competition preventing the two largest plans to increase prices,” the PSR said.
‘HIGH LEVELS OF SECURITY’
Visa said the fees reflect the “tremendous value we provide to financial institutions, merchants and consumers, including extremely high levels of security and near-perfect operational resilience.”
Mastercard said in a statement that it disagreed with the PSR’s findings.
“The payments industry has never been more competitive, which is reflected in the wide choice of payment options available to UK consumers and businesses,” the report said.
The PSR said it has proposed “remedies” for public consultation, including improved transparency for users, and obligations for Mastercard and Visa to explain, consult or document the reasons for price changes.
It also proposed reporting more financial information to the PSR on an ongoing basis to improve oversight of Mastercard and Visa’s UK operations.
The public consultation is open until July 30 and a final report on card schemes and processing fees is expected in the final quarter of the year.
“If the final report confirms the preliminary finding that the market is not working properly, the PSR will consult on the implementation of any solutions,” the watchdog said.
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