The UK’s Payment Systems Regulator (PSR) has published the final terms of reference for the market review in card acquiring services.

Card payment systems enable people to make payments using debit, credit, charge and prepaid cards when purchasing goods or services from a merchant. To accept card payments, merchants need to buy card-acquiring services.  

The review follows the 2015 EU legislation capping the level of interchange fees that merchant’s bank (the acquirer) pay to a card user’s bank (the issuer). The PSR has raised concerns that acquirers have not reduced the prices charged to merchants in line with the change in their underlying costs.

In addition to the interchange fee regulation, there have been significant changes to the card acquiring services in the recent past. New entrants have made it much easier for merchants to accept payment cards and alternative mechanisms to card payments are being developed by a number of fintechs.  These changes mean that assessing competition in the market will be anything but straightforward.

The PSR is now in the information gathering phase of the review to collect further evidence and information from stakeholders.  The PSR aims to publish its interim report at the end of 2019 and final report in 2020.

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