UK trade bodies blow up PSR regulator on card payments – Retail Technology Innovation Hub

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Cards now make up over 80% of UK retail sales, with Visa and Mastercard accounting for 99% of card transactions.

Retailers spent 1.3 billion in 2020 accepting payments from their customers and eventually these costs, equivalent to more than 46 per household, will be passed on to the consumer, the BRC et al say.

Andrew Cregan, Head of Finance Policy, BRC, says: Our national regulator proposes vague and distant goals to address today’s payment problems and it’s too little, too late. The Treasury Select Committee should conduct an assessment of the effectiveness of the RDPs and the value of this strategy.

Martin McTague, National Vice President, Federation of Small Businesses, comments: With the shift to contactless acceleration, card transaction charges are weighing heavily on small businesses trying to recover from an 18-month outage.

The RDP should do more to address the rising fees charged by a handful of suppliers. Interchange regulation means little if card companies have carte blanche to raise other fees, fees that often affect the small businesses that make up 99% of our business community.

Greater parliamentary scrutiny over RDP work should help spur the regulator to set more measurable and concrete targets.

The RDP responds

A RDP spokesperson told RTIH: We know that most people currently use a card for retail payments and have identified a number of actions in our future strategy that will be able to provide real alternatives.

The RDP agrees that card fee increases will impact the card acceptance cost for merchants and ultimately the prices consumers pay. However, the absence of specific regulatory limits is not in itself sufficient reason to increase certain fees.

That’s why our strategy focuses on fostering competition between payment systems so that, for example, in the future people can choose to use account-to-account payments (when a payment goes from one bank account to another, such as an online bank transfer) to purchase your groceries.

Increased competition in retail payments should keep card acceptance costs at reasonable levels for merchants and, in the long run, increase innovation. We are consulting on our strategy, which includes acknowledging that further regulatory action may be needed.

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