Mastercard, Visa fees market review overview:
- Who: The UK’s Payment Systems Regulator (PSR) will review Visa and Mastercard fees, which have increased significantly following Brexit.
- Why: The PSR will investigate whether the higher Mastercard and Visa fees are a sign of market failure.
- Where: The evaluation will take place across the UK.
The UK’s Payment Systems Regulator (PSR) will conduct two market reviews of Visa and Mastercard fees, Reuters reports.
The PSR will investigate whether the higher Mastercard and Visa fees are a sign of market failure.
One market review will look at the credit card companies’ processing fees on their networks, and the other will review five-fold fees imposed on certain overseas transactions after Brexit.
A preliminary inquiry did not find justification for the increase in Visa and Mastercard fees, the PSR tells Reuters.
Visa and Mastercard transactions reportedly accounted for 99% of all credit and debit card payments made in the United Kingdom in 2021.
“We want to understand whether card payments are working well and to make sure that merchants, and ultimately consumers, get a good deal,” PSR’s head of strategy Natalie Timan tells Reuters.
Based on the PSR’s findings, the watchdog may choose to implement changes to promote competition and reduce harm to companies and consumers.
Mastercard, Visa fees increased after Brexit
After Brexit, when the UK famously voted to separate from the European Union, payment card companies were no longer bound by certain rules capping the fees they can charge. The EU implemented the interchange fees cap in 2015 due to concerns that Visa and Mastercard fees were causing companies to experience higher costs that they passed on to consumers, Reuters reports.
Amazon reportedly suggested last year it would stop accepting transactions made with Visa credit cards in the UK because of the hefty fees.
This is not the first time Visa and Mastercard have faced regulatory scrutiny over the fees they charge. Last year, the Competition Appeal Tribunal allowed a £14B Mastercard fees class action lawsuit to move forward.
The Mastercard fees class action lawsuit challenged the payment card company’s practice of imposing allegedly excessive interchange fees on merchants’ banks, causing merchants to pass on the costs to consumers.
Have you noticed an increase in Visa and Mastercard fees? Tell us what you think of the PSR investigation in the comments below!
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