The UK's Payment Systems Regulator is to undertake two market reviews into Visa and Mastercard scheme fees and cross-border interchange charges.
The PSR in April red flags about the "high card fees" that merchants pay to Visa and Mastercard, noting that they have risen "significantly" in recent years. In launchng the review the watchdog says it wants to understand whether the markets in connection with scheme and processing fees are working well.
Cross-border interchange fees are also under investigation, with costs for card transactions having increased five-fold since the UK left the EU. The PSR says it wants to understand the "rationale" behind these increases.
Natalie Timan, head of strategy at PSR, says: “We’ve been gathering information since the start of this year and have identified that a detailed review of the market is needed. We have set out what we will assess in these reviews, which will then inform any decisions on the steps we might need to take to promote effective competition or to address any harm.”
The draft terms of reference for the market reviews are open for consultation until Tuesday 2 August.
Meanwhile, the PSR is also looking to remove barriers to the uptake of A2A retail payments, which it says can provide a "credible" alternative to the card schemes.
It will investigate whether the commercial incentives for banks, intermediaries and merchants are there to support greater use of A2A payments and what it can do to increase uptake and promote competition with cards.
The PSR is also working with the CMA, FCA and Treasury on the future of open banking regulation, which will play a major role in A2A payments uptake.