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The Payment Systems Regulator (PSR) has published its initial remedies consultation for its card-acquiring market review, as it aims to throw a lifeline to heavily burdened merchants.
The PSR has outlined its plans to deal with the card acquiring market, aiming to reduce the costs that merchants currently incur for card payments.
“Cards have continued to be the payment method of choice for the majority of consumers, with 15.5 billion debit card payments made in 2020,” said Genevieve Marjoribanks, head of policy at the PSR. “The role card-acquiring services play is vital in enabling merchants to accept these card payments.”
The PSR is seeking feedback on its proposed remedies, with industry stakeholders needing to have responded by April 6. As well as the remedies outlined by the PSR, it has called for alternative ideas to be touted by those providing feedback.
The payments watchdog then plans to issue a provisional decision and draft remedies notice, and a final remedies notice later this year, it has confirmed.
The PSR has outlined four potential remedies in its consultation that it could impose to address the issue.
The first focuses on greater transparency, which the PSR says would help merchants understand the pricing elements of any services they use. If this option came to fruition, card acquirers would be required to provide summary information boxes setting out the key price and non-price service elements of card-acquiring services.
These would need to be in both bespoke form and published with general information in a generic format.
The PSR has also posed the possibility of comparison tools. Like price comparison websites, the authority wants the industry to help stimulate digital comparison tools (DCTs) to help merchants to see whether they are getting the best deal.
Greater engagement by acquirers has been suggested as a method to help merchants know when their contracts are due for renewal. Here, the PSR says that there needs to be an agreed standard of messaging by providers that will support merchants in understanding that their contract is due for renewal, as well as the terms of the contract, on an annual basis.
Finally, the PSR has suggested that merchants need more powers to switch providers. The regulator wants to address barriers to switching between card-acquiring services, which arise from point of sale (POS) terminal leases, by looking at potential options for merchants to switch without incurring undue cost or suffering inconvenience from having to also exchange their POS terminal.
This could include the replacement of terminals by POS terminal lease providers for instance.
The card acquiring market has long been a priority for improvement at the PSR. In 2020, it went against the findings of the European Commission in its Interchange Fee Regulation review, saying that more work was required to ensure that smaller merchants benefit from caps on interchange fees.
It also hinted in October that it may still intervene over merchant fees, in light of rising interchange costs following Brexit.
