[1/3]Visa credit score and debit playing cards are seen on this image illustration taken August 2, 2022. REUTERS/Benoit Tessier/File Picture Purchase Licensing Rights
LONDON, Dec 13 (Reuters) – Britain’s funds regulator on Wednesday provisionally proposed a cap on cross-border interchange charges on retailers and different companies charged by Mastercard (MA.N) and Visa (V.N) on transactions made between the UK and European single market.
The Fee Techniques Regulator (PSR) mentioned a cap would shield companies from overpaying, after it printed interim findings of a market evaluation on interchange charges charged since Brexit, when the bloc’s longstanding cap ceased to use in Britain.
UK lawmakers had piled strain on the PSR to contemplate re-introducing a cap in Britain, and the watchdog mentioned final 12 months it could conduct two market opinions, however that an end result may take years.
The PSR mentioned the evaluation targeted on fees set by Mastercard and Visa, as they account for 99% of debit and bank card funds within the UK.
The watchdog mentioned each corporations had probably raised charges to an “unduly excessive degree”, costing UK companies an additional 150-200 million kilos ($190-250 million) final 12 months attributable to charge will increase, with the fees probably handed on to customers.
“In brief, at this stage, we don’t suppose this market is working properly,” PSR managing director Chris Hemsley mentioned in an announcement.
Below the proposals, the PSR would impose an preliminary time-limited cap of 0.2% on UK-European Financial Space debit transactions and 0.3% on credit score transactions. A long-lasting cap would then be imposed as soon as additional evaluation is carried out.
A spokesperson for Visa mentioned the corporate strongly disputed the findings of the PSR’s interim report and mentioned the proposed treatments had been “not justified”.
“Accepting dependable, safe, and modern digital funds represents huge worth to UK companies, particularly when promoting abroad,” the spokesperson mentioned.
“These interchange charges apply to lower than 2% of UK card funds – European (EEA) cardholders shopping for on-line from a UK vendor – and mirror the truth that these transactions are extra complicated and carry far better danger of fraud.”
Mastercard mentioned interchange charges mirror worth in an especially aggressive market. “We don’t agree with the PSR’s findings and can proceed to teach them on the crucial significance of digital funds to the UK economic system,” a spokesperson mentioned.
The PSR is inviting suggestions on the proposals till the top of January, with a last report due within the first quarter of 2024.
A authorities commissioned report final month mentioned Britain wants a “digital various” to counting on Visa and Mastercard no matter what the PSR does, echoing longstanding ambitions within the EU for a “house grown” various to the American duo that has but to emerge.
($1 = 0.7990 kilos)
Extra reporting by Huw Jones, modifying by Sinead Cruise and Louise Heavens
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