May 22, 2022


Let'S Talk Law

U.K. PSR Close Card-acquiring Consultative Forum with Insightful Solutions

U.K. PSR Close Card-acquiring Consultative Forum with Insightful Solutions

The U.K. PSR (payment systems regulators) closed a public consultation forum on mitigating future remedies it intends to apply in the card-acquiring marketplace. This public forum comes from the PSR evaluation of the card acquiring business. The regulator realized that small and medium-sized businesses could benefit more by negotiating with their card acquiring supplier.

What was reviewed?

The market under review is the acquiring services departments. This scrutiny involved the five leading companies operating in the U.K., Lloyds Bank Cardnet, Barclaycard, Worldpay, Elavon, and Global payments. These companies facilitate card payments of products from a customer to the merchant. Afterward, the cardholders pay fees to global card payment systems like MasterCard and Visa.

The solutions focus on two issues: Removing barriers that restrict some business owners from switching their suppliers because of contract terms—and secondly, having more transparency on prices to facilitate a better comparison of getting service providers.

The first solution does not require a regulator. Instead, PSR aims at ensuring the market is more transparent by reducing the limitations of policy terms that bind a merchant to specific suppliers. In addition, the industry should incorporate digital tools for supplier comparison. Finally, this solution aims to give a merchant the option of selecting the best supply deal that works for them.

The second solution proposes the need for card acquirers to provide information boxes that set out the key price and non-price options of card acquiring services. This option will assist merchants in comparing providers yet allowing the regulator to assess which information is to be made public. However, it would help if you realize that since few companies control the market, its full transparency would reduce control for the card-acquiring providers rather than encourage competition.

When the regulator agrees to implement these or more solutions, they will have to issue an interim solution for a final consultation and give an instruction notice for new measures to be adopted. In its final notice report, the regulator should include a period for implementation.

Final thought

It is important to know that the proposed solutions are not designed to target the level of card charges or any service fee. However, PSR senior manager has noted an increase in the scheme charges and cross-border exchange fees in the past years. He further questioned if there are enough competition restrictions on card schemes.

As for now, the regulator policy to deal with the possible increment in card payment fees is not to bring in new charges but to encourage account to account payment strategy as a viable option for card payments.

Author bio
 Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of Lloyds cardnet . He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.