By Huw Jones
LONDON (Reuters) – British lawmakers plan to scrutinise increases in the fees Visa and Mastercard charge businesses after the country’s payments regulator found no evidence to justify the rises, a parliamentary committee said on Thursday.
Parliament’s Treasury Select Committee said the companies, whose networks account for 99% of card transactions in Britain, had increased the scheme and interchange fees paid by businesses to card issuers when a card is used.
“Given that Visa and Mastercard currently dominate this space, it’s vital to ensure that there is sufficient regulation and competition in the market so that businesses are not subject to ever-increasing servicing costs,” the chair of the committee, Mel Stride, said in a statement.
Mastercard said Britain benefited from a highly competitive and advanced payments system with Mastercard at its core.
“We note the interest of the Treasury Select Committee and look forward to working with the PSR (Payment Systems Regulator) as it conducts its review,” Mastercard said.
Visa had no immediate comment.
Businesses pay scheme fees to be part of a payments network and interchange fees that are based on individual transactions. Increases in fees merchants pay to card issuers are typically passed on to consumers, regulators have said.
Britain’s PSR said in November that card services did not work well for smaller businesses.
It told Stride in a letter on Thursday that it will propose “remedies” this month to tackle rising scheme fees, which have doubled between 2014 and 2018.
“Our analysis indicates a substantial proportion of these increases were not explained by changes in the volume, value or mix of transactions,” the PSR said. “Our ongoing engagement with merchants suggests that they have continued to significantly increase since then.”
Amazon.com said in November it would stop taking payments from Visa credit cards in Britain from mid-January due to rising fees.
Graphic: PSR Interchange Fees Graphic- https://fingfx.thomsonreuters.com/gfx/mkt/klvykqbywvg/PSR%20Graphic%20on%20Interchange%20Fees.PNG
Interchange fees for purchases by British consumers from the European Union rose last year after an EU cap ended due to Britain’s full departure from the bloc at the end of 2020. Fees for purchases in Britain, however, remain capped under UK rules.
The PSR said it was closely monitoring the increases in cross-border interchange fees in October by Visa and Mastercard, saying it had seen no significant changes in costs for issuers.
“Our proposed work will be looking more closely at the reasoning behind the recent increases and whether this indicates any themes or concerns that warrant action from us,” it said.
Stride said the Treasury committee would discuss the regulator’s plans at a hearing in March.
Efforts in the EU to end the dominance of Mastercard and Visa have had mixed results https://www.reuters.com/article/eu-banks-payments-idCNL8N2T81ZL.
(Reporting by Huw Jones; Editing by David Clarke)