The UK Payment Systems Regulator (PSR) has confirmed that it has “approved an additional phase of work that will look into how well this (card) market is working, including the issue of increasing card fees. If necessary, we will intervene to address any issues we identify.”

The commitment follows a loose indication from the PSR’s Managing Director, Chris Hemsley, on 5th October that “in the shorter term we might still intervene, including if scheme fees and interchange fees continue to rise unchecked.” This was the first time in the history of the PSR that a public indication had been made that it may act on excessive card fees, however a month later the PSR appeared to backtrack on this when the same comments were followed by “…to address these behaviours, the PSR set out in its strategy its plans to unlock the potential of account-to-account payments to offer a viable alternative to card payments” – offering no action to curb anti-competitive behaviour within card payments, which account for 81% of UK retail spending.

It appears that the Regulator has finally made an actual commitment after widespread coverage of both Amazon’s decision to no longer accept certain payment cards and the research by CMSPI, in conjunction with the BRC, revealing post-Brexit fee increases of up to 475%. The BRC also secured a commitment at Parliamentary Group meeting on Tuesday from the Economic Secretary to the Treasury, John Glen MP, that the Government would take-up the matter of excessive card fees with the PSR. 

Earlier this year nearly 40 cross-party MPs wrote to the PSR calling for robust regulatory measures on card fees, and in September the BRC, BIRA, ACS, FSB, and UKHospitality jointly called – for the second year in a row – for immediate action to tackle soaring card fees which add to the price of goods and services, calling on Parliament (via the Treasury Committee) to urgently intervene.

Now that a commitment has - at long last - been made to “look into” card fees, the questions become what action the PSR will take, if any, and how long do British business and consumers have to wait for its delivery. The expertise of the retail industry is at the PSR’s disposal for the immediate development of robust measures to tackle anti-competitive card fees which should include:

• ABOLITION OF INTERCHANGE FEES: The PSR should use its existing powers to abolish card interchange fees in the UK. This would bring regulation into line with the decisions of UK courts, in particular the 2020 Supreme Court judgment that Mastercard and Visa interchange fees are unlawful.
• REGULATION OF SCHEME FEES: The PSR should use its existing powers to bring scheme fees within scope of the UK IFR. The level of scheme fees must be subject to “utility-style” economic regulation. This is what the PSR was set up to do.