As cards play an essential role in retail payments for both consumers and businesses, it is crucial for card schemes to be competitive when dealing with merchants and acquirers to create an efficient dynamic between demand and supply.
In its recently published report, the PSR states that between 2019 and 2024, the two main global card schemes, Mastercard and Visa, have increased their scheme and processing fees by more than 30%, while the quality of service has not increased dramatically.
UK businesses don’t really have a choice when it comes to these fees, as the two card schemes count for 95% of all transactions using local issued cards. At the same time, in a cashless economy, non-card payment methods are not yet competitive alternatives for businesses.
The PSR report also found that Mastercard and Visa provide complicated and unclear pricing statements to card acquirers, while the latter cannot access information about fees in an easy way. Moreover, often enough acquirers must handle delays and insufficient notice periods to implement these fees. Acquirers cannot really negotiate these fees either, which makes for card payments to ultimately become a luxury, especially for SMEs.
To create a healthy competitive background and prevent the monopole of card issuers, the PSR recommends improved transparency for card schemes so that acquirers and businesses can make informative decisions and alternatively switch to different suppliers.
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