With Finextra reporting earlier this week on the PSR’s investigation into the dominance of Visa and Mastercard in the UK payments market, we asked our CEO Richard Bradley for his comments:

It was no surprise to anyone that the PSR report found that the two schemes are effectively operating a duopoly and that the lack of competition is failing to prevent price rises, it’s something which has been a concern since I set up our brokerage in 2005. 

Things that jump out from the report to me are;

  1. The significant increase in scheme and processing fees by Mastercard and Visa over the past five years, with little evidence of improved service quality.
  2. The lack of transparency around pricing, with complicated and unclear statements provided to acquirers and limited ability for acquirers to negotiate fees.
  3. The delays and insufficient notice periods for fee changes, make it difficult for businesses to plan their budgets.

I agree with the PSR’s focus on improving transparency and providing clearer information to acquirers and businesses. The proposed remedies requiring Mastercard and Visa to step up, better explain and document fee changes and pricing structures are a positive step. We feel there are too many barriers in the industry because of unnecessary complex language and that’s why we will always go the extra mile to explain everything in simple easy to understand language. 

However, I believe that more can be done to address the lack of competition in the market. The PSR’s push for greater use of open banking and account-to-account, also known as Pay By Bank payments, is a welcome development. But it is important to ensure that these new options are accessible and attractive to all businesses. While it’s early days for Pay By Bank I believe this isn’t the right choice because a large part of UK businesses aren’t helped by such factors as low value face-to-face transactions, which impacts most high street retailers. Awareness is the big challenge to increase adoption and one step is the recent announcement from Stripe that they will be adding Pay by Bank to their offering. 

acceptcards® urges the PSR to consider the following:

  1. Reintroduction of a cap on scheme and processing fees: This would help to ensure that businesses are not unfairly priced out by Mastercard and Visa.
  2. A stronger focus on promoting competition: The PSR should investigate ways to encourage new entrants into the market and make it easier for businesses to switch between card schemes. We’ve seen new players in the acquiring market drive competition, this needs to be replicated.
  3. Improved access to data: This would allow all acquirers to work together to negotiate better fees with Mastercard and Visa that would naturally drive more competitive offerings for UK businesses.

All of the above is just a small illustration of how complex the UK payments market is, and why we do what we do. Our aim is to always take the hassle out of what should be simple. We will continue to bang the drum to champion transparency and stop the needless bamboozling of customers who take card payments.