Industry encouraged to have its say on card payment review

The travel trade is being asked for its input into a review of the supply of card-acquiring services.

The Payment Systems Regulator (PSR) announced last week it will conduct a market review and is now asking for submissions on draft terms of reference that will form the review.

The draft terms cover the nature and characteristics of card-acquiring services; who provides card-acquiring services and how their market shares have developed historically; how merchants buy card-acquiring services; whether there are credible alternatives to card-acquiring services for some or all merchants and the outcomes of the competitive process including the fees merchants pay and the quality of service they receive.

The PSR decided to carry out the review amid ‘concerns that this market may not be working well for merchants, and ultimately consumers’.

Under EU Interchange Fee Regulations, interchange fees for card payments were capped at the beginning of the year.

However, the PSR has concerns that ‘acquirers are holding on to the savings they made from the IFR interchange caps, which could indicate that some merchants, especially smaller merchants, are suffering significant harm because competition in the supply of card-acquiring services is not working well’.

There are also concerns over a lack of transparency around the fees that merchants pay to accept card payments, as well as rules around card scheme fees.

Interested parties have until September 14 2018 to submit comments and suggestions.

The PSR said: "Card payment systems enable people to make payments using debit and credit cards when purchasing goods or services from a merchant. To accept card payments, merchants need to buy card-acquiring services.

"Stakeholders have raised concerns with us that indicate the supply of card-acquiring services may not be working well for merchants, and ultimately consumers. Our market review is prompted by these concerns.

"As part of our work, we will examine how competition in the supply of card acquiring services operates, and the outcomes of the competitive process. This includes looking at the fees merchants pay for card-acquiring services and the quality of service they receive.

"The key question we will explore is: Is the supply of card-acquiring services working well for merchants, and ultimately consumers?"

Once submissions have been received, PSR will publish final terms of reference by the end of 2018 and will set out its timetable of work, followed by an interim report, then a final report.

ABTA has welcomed the market review and will start consulting with members in August on the terms of reference.

An ABTA spokesperson said: "Our Member Survey, conducted earlier this year, found that the majority of traders were not experiencing cost savings in relation to taking card payments, had difficulty in getting transparent information on fees from their merchant acquirers, and had little understanding of how their charges are calculated.

"This review offers an excellent opportunity to push for enhanced regulatory oversight across the payment chains, and encourage a more competitive payments environment."

For details of where to send comments, see here.