Britain‘s payments watchdog will review banks which process card transactions on behalf of merchants such as retailers following concerns that customers may not be getting the best deal.
The Payments Systems Regulator (PSR) published draft terms of its review into card- acquiring services provided by high street banks which accept and process card payments on behalf of a merchant for a fee.
“The costs merchants incur for such services may ultimately be reflected in the prices they charge and services they offer to their customers,” the PSR said in a statement.
UK Finance, which represents the sector, said acquirer fees are negotiated directly with the retailer and will depend on factors like volume of transactions and type of business.
“Card payments play a vital role in our economy, with card spending equivalent to about a third of the UK‘s GDP,” UK Finance said.
“It is understandable, therefore, that the PSR would want to review this important market. We will be responding in due course.”
The watchdog has powers to alter the sector‘s structure if it finds harm to customers.
The use of cards to buy goods and services became the most frequently used payment method in 2017.
“The PSR is proposing to carry out this market review having taken into account the concerns that have been brought to its attention,” the watchdog said.
“The regulator wants to ensure that the supply of card-acquiring services is competitive and works in the interests of merchants, and ultimately consumers.”
A public consultation on the terms of the review is open until September. (Reuters)