The U.K.’s Payment Systems Regulator (PSR) released a report on May 21, highlighting significant fee increases by Visa and Mastercard over the past five years that are not justified by transaction volume, value, or mix changes. The report states these increases cost U.K. businesses an additional £250 million annually for card acceptance, as Visa and Mastercard cards account for 95% of transactions with U.K.-issued cards.
The PSR found that Visa and Mastercard’s profit margins appear higher than expected in competitive markets, though it lacked sufficient data to confirm excessive profits definitively. Both networks argue that their service quality has improved, citing enhancements in chargeback and dispute resolution processes. They also emphasize competition from open banking, buy now, pay later (BNPL), digital wallets, and in-house payment processing by Big Tech firms.
Mastercard responded to the report, claiming that the payments industry is highly competitive and that the PSR failed to consider the investments needed for a secure network that prevents significant fraud. Visa highlighted its investments in secure and innovative digital payments, which it says drive economic growth.
The PSR is not currently considering price caps but is looking into requiring Visa and Mastercard to provide ongoing financial and performance reports specific to their U.K. activities. This mandatory reporting aims to enhance transparency and may require the creation of a U.K. pricing committee within the card schemes’ governance structures.
