A British regulator has decided to drop price caps on certain Visa and Mastercard fees, even though the agency found that the two companies did not face effective competition when dealing with merchants.
The Zhitong Finance App learned that a British regulator has decided to forego setting price caps on certain Visa (V.US) and Mastercard (MA.US) fees, even though the agency found that the two companies did not face effective competition when dealing with merchants.
The UK Payments System Supervisory Authority (PSR) is considering requiring the two giants to provide a more detailed UK financial report, according to a report on Tuesday. It is also considering requiring Visa and Mastercard to be more transparent in their pricing decisions.
In its report, the regulator stated: “Based on the evidence we currently have, designing a price cap that meets our statutory goals will be a challenge. The problems we have had in gathering the right data from the various card plans mean that, as it stands, this is not an appropriate response to the harm we have discovered.”
The move is a rare resuscitation for these two companies, which have been criticized by numerous regulators and legislators around the world for the fees they charge. Although it may only cost a few cents each time, when these charges add up, the actual cost increases dramatically: According to the Nielsen Report, an authoritative journal in the payments industry, US merchants spent a record $172 billion on credit card fees last year, an increase of 7.5% over 2022.
Visa and Mastercard defended the fees they charged, saying they enabled them to invest in improving the security of global payments. Visa, for example, said it blocked $40 billion worth of fraud globally last year.
“Visa's fees reflect the tremendous value we provide to financial institutions, merchants, and consumers,” Visa said in a statement on Tuesday.
PSR's latest guidance on waiving price caps applies to Visa and Mastercard plans and processing fees. The regulator indicated that it may consider implementing such restrictions in the future if it receives information on improvements in the practices of these two companies.
Mastercard said it disagreed with the regulator's findings that it did not face effective competition.
“We will continue to work transparently with PSR and prove the tremendous value that Mastercard and e-payments bring to the UK economy,” Mastercard said in a statement.