Britain’s payments watchdog has called for reforms that would increase competition in retailers’ card services amid increased cashless transactions resulting from the pandemic.
As Reuters reported on Wednesday January 26, the Payment systems regulator (PSR) said its reforms, which are available for public review until April, will address the lack of transparency in the fees charged to retailers by the companies that handle their card payments.
“We invite industry to develop proposals for detailed specifications for the remedies we describe and for any other measures they wish to propose,” the PSR wrote in its consultation document.
The reforms would also address open-ended contracts and contracts that discourage switching, offering some relief to retailers. According to Reuters, the UK has around 157 million credit cards, with consumers making 15.5 billion debit card payments in 2020.
The outlet notes that the five biggest card “acquiring” services – Barclaycard, Elavon, Lloyds Bank Cardnet, Global Payments and Worldpay – enable merchants to accept card payments from customers. In turn, acquirers pay fees to international card payment systems such as Visa and Mastercard.
Under the PSR proposal, acquirers would provide retailers with standardized key price information and contact retailers when an initial contract is about to expire. From there, these companies would also send annual messages to retailers reminding them that they might consider other acquirers.
The reforms would also ensure that acquirers could not prevent or discourage retailers from researching and switching to new services.
Read more: UK payments regulator prioritizes direct payments in its strategic plan
The organization’s final remedies are expected to be released later this year. Earlier this month, PSR unveiled a five-year strategic plan to improve the payments industry.
The plan is divided into four focus areas, two of which relate to ensuring consumer access to payment services and protecting them when using them. The other two aim to encourage competition between operators, payment services and infrastructure providers, and to unlock the potential of direct payments as an alternative to cards.