On 15 September 2020, the Payment Systems Regulator (PSR) issued an interim report on the supply of card acquiring services.
The interim report contains the PSR’s provisional findings of its market review into the supply of card acquiring services in the UK. The PSR conducted the market review using its general powers under Part 5 of the Financial Services (Banking Reform) Act 2013. The PSR’s market review was prompted by concerns about card payments raised by various stakeholders. Issues raised included a concern that acquirers might not have passed on to smaller merchants the savings they made from the interchange fee caps introduced by the Interchange Fee Regulation. Among other concerns were a lack of transparency around the fees merchants pay to accept card payments and that it was hard for them to compare and switch providers.
The interim report shows that merchants could make savings by shopping around and either switching or negotiating with their current provider – but many small and medium ones don’t.
The interim report includes several potential remedies to make it easier to search and switch for a new provider or better deal, including:
- Requiring all contracts for card-acquiring services to have an end date, providing a prompt for merchants to shop around.
- Requiring changes to point of sale (POS) terminal contracts to limit their length, ending contracts that auto-renew for successive fixed terms and making it easier to exit POS terminal contracts without incurring exit fees.
- Making it easier for merchants to research and compare prices and options available to them.
The PSR is now consulting on the contents of the interim report and the proposed remedies. The publication of the interim report will be followed by a consultation period of 12 weeks. The deadline for feedback is 8 December 2020.