British lawmakers plan to scrutinize increases in the fees Visa and Mastercard’s charge businesses after the country’s payments regulator found no evidence to justify the rises, a parliamentary committee stated on Thursday, January 13.
Parliament’s Treasury Select Committee said the companies, whose networks account for 99% of card transactions in Britain, had increased the scheme and interchange fees paid by businesses to card issuers when a card is used.
“Given that Visa and Mastercard currently dominate this space, it’s vital to ensure that there is sufficient regulation and competition in the market so that businesses are not subject to ever-increasing servicing costs,” the chair of the committee, Mel Stride, said in a statement.
Mastercard stated Britain benefited from a highly competitive and advanced payments system with Mastercard at its core.
“We note the interest of the Treasury Select Committee and look forward to working with the PSR (Payment Systems Regulator) as it conducts its review,” Mastercard stated.
Businesses pay scheme fees to be part of a payments network and interchange fees that are based on individual transactions. Increases in fees merchants pay to card issuers are typically passed on to consumers, regulators have said.
Britain’s PSR stated in November that card services did not work well for smaller businesses.
It told Stride in a letter on Thursday that it will propose “remedies” this month to tackle rising scheme fees, which have doubled between 2014 and 2018.
“Our analysis indicates a substantial proportion of these increases were not explained by changes in the volume, value or mix of transactions,” the PSR wrote. “Our ongoing engagement with merchants suggests that they have continued to significantly increase since then.”
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