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Bank Cards

Question for Treasury

UIN 5231, tabled on 21 May 2021

To ask the Chancellor of the Exchequer, what recent assessment has he made of the impact on (a) merchants and (b) consumers of the fees levied on businesses for accepting payment card transactions.

Answered on

27 May 2021

The Payment Systems Regulator (PSR) was established in 2015 with statutory objectives to promote competition, innovation and the interests of service users in payment systems, including card payment systems, with powers of supervision and enforcement in support of these objectives.

With regards to the cost of card payments, the PSR is currently carrying out a market review into card acquiring services. Its review is examining how effectively competition is working in the provision of these services, including looking at the fees businesses pay, such as card scheme and interchange fees, and the quality of service they receive. The interim findings were published on the 15 September. The report found that the supply of these services worked well for the largest merchants with annual card turnover above £50 million, but that small and medium-sized merchants and large merchants with annual card turnover up to £50m could make savings by shopping around of negotiating with their current supplier. The PSR is now consulting on the contents of its interim report and has engaged with relevant parties on proposals to help merchants get a better deal on their acquiring services. The Government looks forward to the final report later this year.

With regards to interchange fees, the Government has legislated to ensure that these fees remain capped for UK domestic card transactions, where both the card issuer and acquirer are located in the UK, through the Interchange Fee (Amendment) (EU Exit) Regulations 2019 made under the European Union (Withdrawal) Act 2018. The levels of UK interchange fee caps are at the same levels as before the end of the Transition Period. Any changes in cross-border interchange fees between the UK and EU, as between the UK and other third countries, are a result of commercial decisions by card schemes.

The Government regularly engages with the PSR and other interested parties on these and other issues relating to the regulation of payment systems.

Answered by

Treasury