Watchdog to look into cost of card services

BRITAIN’S payments watchdog has set out plans to investigate whether banks and other finance firms are ripping off retailers.

The Payment Systems Regulator (PSR) has set out the terms of a market review into so-called card-acquiring services. These firms are the middlemen paid by shops and others to process card payments, typically through Mastercard or Visa’s systems.

The PSR wants to investigate whether card-acquirers are overcharging small businesses due to a lack of competition, with costs being passed on to consumers. Around 30 card-acquirers dominate the UK, including specialists Worldpay and Global Payments, and Barclaycard and Lloydscardnet, which are part of Barclays and Lloyds respectively.

Last year, card payments overtook cash for the first time, according to bank lobby group UK Finance. More than 16bn payments were made by debit or credit card in the UK in 2017.

Hannah Nixon, managing director of the PSR, said: “With more and more of us using our payment cards to make purchases, we want to make sure that retailers that accept card payments can access card-acquiring services that are competitive, offer value for money and are innovative – working in both their interests, and consumers’ interests too. This is about making sure that payment systems work well for everyone, and we will look to make changes if we think improvements should be made.”

Mike Cherry, chairman of the Federation of Small Businesses, said: “The fees charged by card terminal providers to small firms are a drain on business investment and growth.”

A spokesman for UK Finance said: “Card payments play a vital role in our economy, with card spending equivalent to about a third of the UK’S GDP. It is understandable, therefore, that the PSR would want to review this important market. We will be responding in due course.”