Regulator finds fees too high, seeks to protect U.K. businesses

  • U.K. Payment Systems Regulator plans to cap cross-border interchange fees on Mastercard and Visa
  • Mastercard and Visa cards account for 90% of online transactions at U.K. businesses
  • U.K. businesses paid an extra £150-200 million due to fee increases
  • PSR seeks views on provisional findings and proposed remedies
  • Deadline for comments is Jan. 31, final report to be published in Q1 2023

The U.K. Payment Systems Regulator (PSR) has provisionally announced plans to cap cross-border interchange fees on credit and debit cards issued by Mastercard and Visa. The regulator launched a review after the companies raised some of the fees in 2021 and 2022. Mastercard and Visa cards account for nine out of 10 online transactions at U.K. businesses, leaving them with little choice but to pay the increased costs. U.K. businesses estimate they paid an extra £150-200 million due to the fee increases. The PSR aims to protect U.K. businesses while seeking feedback on its provisional findings and proposed remedies. Interested parties have until Jan. 31 to comment, and the final report is expected to be published in the first quarter of next year.

Public Companies: Mastercard (MA), Visa (V)
Private Companies:
Key People: Chris Hemsley (PSR Managing Director)

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Factuality Level: 7
Justification: The article provides information about the U.K. Payment Systems Regulator’s provisional plans to cap cross-border interchange fees on credit and debit cards. It includes statements from the regulator, Mastercard, and Visa. However, the article lacks in-depth analysis and does not provide a balanced perspective from other stakeholders.

Noise Level: 7
Justification: The article provides information on the U.K. Payment Systems Regulator’s plan to cap cross-border interchange fees on credit and debit cards. It mentions that Mastercard and Visa have likely raised the fees too high and that U.K. businesses have little choice but to pay the increased costs. The article also includes estimates of the extra amount paid by U.K. businesses due to the fee increases. However, it lacks in-depth analysis of the long-term trends or antifragility of the payment systems and does not explore the consequences of the decisions on those who bear the risks. It also does not provide scientific rigor or intellectual honesty, as it only includes statements from the regulator and the companies involved without further evidence or data. Overall, the article contains relevant information but lacks in-depth analysis and supporting evidence.

Financial Relevance: Yes
Financial Markets Impacted: The proposed cap on cross-border interchange fees on credit and debit cards by Mastercard and Visa could impact the financial markets and companies involved in the payment systems industry.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The news article discusses the potential cap on interchange fees by the U.K. Payment Systems Regulator, which could have financial implications for Mastercard, Visa, and U.K. businesses that accept payments from the European Economic Area.

Reported publicly: www.marketwatch.com