The United Kingdom’s (UK) Payment Systems Regulator (PSR) on Thursday accused Visa and Mastercard of charging “excessive” fees and restricting competition in the card payments market, costing businesses at least 170 million pounds (218.96 million U.S. dollars) annually and hindering economic growth.
In its final report following a year-long market review, the regulator revealed that the two payment giants, which control 95 percent of UK debit and credit card transactions, have increased their core scheme and processing fees by over 25 percent above inflation since 2017. These fees-paid directly to the networks for services such as payment authorization and fraud prevention-have significantly strained businesses, especially small retailers, amid opaque pricing practices.
The PSR highlighted that Visa and Mastercard face “ineffective competitive constraints” in the UK, allowing them to set fees without rigorous cost analysis or sufficient market competition. The lack of transparent pricing information has further distorted negotiations, leaving merchants and payment processors with no choice but to pass higher costs onto consumers or absorb them, the regulator said.
“Cards are critical to the UK economy, but the current market issues harm businesses and, ultimately, consumers,” said David Geale, the PSR’s Managing Director, Xinhua news agency reported. “Mastercard and Visa’s complex fee structures and unchecked price hikes have allowed them to charge millions more than a competitive market would permit, limiting businesses’ ability to invest and grow,” he added.
To address these concerns, the regulator plans to consult on potential remedies, including fee caps and mandatory disclosure of pricing methodologies, before considering enforcement action.
The findings represent the latest regulatory push to curb Visa and Mastercard’s dominance, following years of merchant complaints over rising transaction costs. With card payments accounting for over 80 percent of UK consumer transactions, the PSR emphasized that market reforms are crucial to ensuring fair competition and fostering innovation.
