UK trade bodies blast Payment Systems Regulator over cards
A group of trade bodies representing the UK retail and hospitality sectors are appealing for parliament to intervene to protect British businesses and consumers from “the mounting cost of anti-competitive practices in card payments”.
The British Retail Consortium (BRC), British Independent Retailers Association (BIRA), Association of Convenience Stores (ACS), Federation of Small Businesses (FSB), and UKHospitality say immediate action must be taken to tackle soaring card fees which add to the price of goods and services.
The call comes as the UK’s Payment Systems Regulator (PSR) consultation on its five-year strategy closes today.
The group says that the PSR, an independent regulator, with its own MD and board, funded by the payments industry and accountable to parliament, is failing to meet its statutory objectives and that its new strategy is “a five year license to deliver very little”.
Cards now constitute more than 80% of UK retail sales, with Visa and Mastercard accounting for 99% of card transactions.
Retailers spent £1.3 billion in 2020 to accept payments from their customers and ultimately these costs, equivalent to more than £46 per household, will be passed onto the consumer, the BRC et al say.
Andrew Cregan, Head of Finance Policy, BRC, says: “Our national regulator is proposing vague and distant goals for tackling today’s payment problems and it’s far too little, too late. The Treasury Select Committee should conduct an appraisal of the PSR’s effectiveness and the value of this strategy.”
Martin McTague, National Vice-Chair, Federation of Small Businesses, comments: “With the shift to contactless accelerating, card transaction charges are weighing heavily on small businesses as they look to recover from 18 months of disruption.”
“The PSR should be doing more to address the surging fees charged by a handful of providers. Interchange regulation means little if card companies have free rein to increase other fees, fees which often hit the small firms that make up 99% of our business community.”
“Greater parliamentary scrutiny of the PSR’s work should help to spur the regulator to set more measurable, concrete aims.”
The PSR responds
A PSR spokesperson told RTIH: “We know that most people currently use a card for retail payments and we have identified a number of actions in our future strategy that will be able to provide genuine alternatives.”
“The PSR agrees that increases to card fees will have an impact on the cost of card acceptance for merchants, and ultimately the prices that consumers pay. However, the absence of specific regulatory caps is not itself sufficient reason to increase particular fees.”
“That is why our strategy focuses on promoting competition between payment systems so that, for example, in future people may choose to use account to account payments (when a payment moves from one bank account to another, like an online transfer) to buy their groceries.”
They concluded: “More competition in retail payments should keep card acceptance costs at reasonable levels for merchants and, in the long-term, increase innovation. We are consulting on our strategy, which includes recognition that further regulatory intervention might be needed.”
