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Card services review raises hopes

Card-acquiring services could become more competitive, if the Payment Systems Regulator (PSR) takes action after it considers the results of a new consultation.

The regulator has issued draft terms of reference using its general powers under the Financial Services (Banking Reform) Act 2013 following concerns that the market might not be working well for retailers, and ultimately consumers.

The PSR says it will examine how competition in the supply of card acquiring services operates and the outcomes of the competitive process.

The review will include scrutinising fees retailers pay for card-acquiring services and the quality of service they receive.

The Association of Convenience Stores (ACS) and the British Retail Consortium (BRC) have welcomed the review.

Andrew Cregan, policy adviser – payments and consumer credit at the BRC, said the increase in card fees was “alarming” at a time when the retail industry was facing acute cost pressures elsewhere.

“Retailers spend £1.1bn on accepting payments of one kind or another every year – the vast majority of which goes to the card payments industry – and our research shows card scheme fees are spiralling, which inevitably pushes up costs for ordinary shoppers,” he said.

The PSR can refer the market, or components of it, to the Competition & Markets Authority (CMA) for in-depth investigation if it has reasonable grounds to suspect any market aspects either individually or in combination are adversely affecting competition.

It can alternatively accept undertakings from the industry instead of referral to the CMA.

The PSR is a subsidiary of the Financial Conduct Authority, funded by the payment services industry.

It says it has an advisory panel “made up of experts from organisations large and small, industry and consumer, right across the payments spectrum” which it uses to help develop effective policy and strategy.

A spokesman said: “The PSR is an independent economic regulator that is accountable to Parliament. We make our decisions based on our three objectives: promoting competition, promoting innovation, and promoting the interests of those that use or rely on payment systems.”

Store Excel members can make their views known on the draft terms of reference by emailing cards@psr.org.uk or by writing to Card-acquiring market review team, Payment Systems Regulator, 12 Endeavour Square, London E20 1JN by 5pm on September 14 2018. Full details here.

Andrew Don.

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