The Payment Systems Regulator (PSR) is consulting on proposals to require Mastercard and Visa (the schemes) to report their UK financial performance, so it can better monitor and assess profitability over time. In its review of card scheme and processing fees, the PSR found evidence consistent with a finding that the schemes’ profit margins are higher than expected in competitive markets.
This follows its market review, which found that the schemes don’t face effective competition, with scheme and processing fees rising and insufficient clarity on the fees businesses have to pay to accept card payments.
To address this, the PSR is consulting on a targeted regulatory financial reporting (RFR) remedy. Developed following extensive engagement with the schemes, RFR would provide robust, reliable data to assess the schemes’ UK profitability and help determine whether scheme and processing fees are working well for UK businesses. It would also support more effective ongoing supervision.
The PSR has decided to require the schemes to provide:
- a profit and loss (P&L) account for their UK card operations, with relevant levels of disaggregation
- contextual information to help the PSR to understand the financial performance of their respective UK card businesses
David Geale, Managing Director at the PSR said:
“Scheme fees have risen substantially in recent years, and we have not seen clear evidence that these increases reflect underlying costs. These proposals are designed to give us a clearer picture of the schemes’ UK financial performance and the drivers behind it. We have listened to feedback and are proposing proportionate, targeted reporting focused on the information we need to assess outcomes. Better transparency will help us assess whether this market is delivering good outcomes for businesses and consumers, or if further intervention may be required in future.”
Next steps:
The PSR will publish its final decision and directions on the Information, transparency and complexity (ITC) and Pricing Governance remedies in the summer, having consulted on these earlier in the year.
Source: PSR
