The Payment Systems Regulator (PSR) has set out a series of proposed remedies aimed at addressing concerns about the fees Visa and Mastercard charge for using their card payment networks, including both scheme fees and processing fees.
Following a detailed market review, the PSR concluded that the market is not working well for businesses or consumers and has opened a consultation on steps to improve transparency, governance and oversight.
Under the proposals, the PSR would require Visa and Mastercard to provide better information on their fees to acquirers and merchants, report more transparently on their financial performance, and strengthen the governance of their pricing decisions. The PSR also plans to publish more information on scheme operations to support greater scrutiny and accountability across the market.
David Geale, managing director of the PSR, said: “Improving transparency will enable businesses to make informed choices about the card payment services they receive. These steps will also ensure we can scrutinise the performance of the card schemes and act quickly in the future if we need to take further action.”
While the proposals are seen as a step towards a fairer and more transparent market, there are growing calls for the regulator to go further.
A tiny step forward
Thomas Gillan, CEO of BR-DGE, a payment orchestration platform that helps merchants connect to multiple payment methods through a single integration, described the PSR’s proposals as a move in the right direction but warned they lag behind the realities merchants have been facing for years.
“Fee structures have become increasingly complex and opaque, placing more pressure on merchants when they’re already having to grapple with so many complexities just to accept payments in the first place,” he said.
“When costs rise with little explanation, everyone in the payment chain – from acquirer to merchant to end consumer – feels the effect. Shoppers pay more, and smaller merchants, in particular, face difficult choices about what payment methods they can afford to offer.”
Gillan also touched on the importance of recognising the part that card schemes have played in supporting commerce.
“It’s important that any scrutiny recognises the global role played by the card schemes,” he continued. “Their infrastructure has underpinned modern commerce and enabled innovation at scale. But transparency around pricing is essential if the market is to remain sustainable and competitive.
“That’s where alternative payment options come in. Merchants should be able to plug into open banking and emerging rails just as easily as they do cards. That’s why we believe the future lies in platform-agnostic API-driven infrastructure. BR-DGE is built to give merchants that flexibility. This isn’t just about saving money – it’s about building a payments strategy that’s future-ready.
“At BR-DGE, we help merchants integrate open banking and other non-card rails alongside cards. Building a modular, intelligent payments stack is the best way for merchants to take back control, while giving consumers a better deal.”
Underlying competition issues
Others have voiced stronger concerns that the PSR’s proposals do not go far enough to address the underlying competition issues.
The British Retail Consortium (BRC) was highly critical of the proposed remedies, arguing that transparency alone will not be enough to rebalance the market in favour of merchants and consumers.
In a statement, Chris Owen, payments policy advisor at the BRC, said: “The consultation represents a failure of vision by the PSR. Their proposed remedies fall well short of the robust measures needed to tackle the harms that have arisen from the dominance of the card scheme operators. Retailers have long been weighed down by the high cost of card payments, and the PSR has found enduring competition problems and inefficiencies that cause serious harm to the retail market.
“The PSR must act on its regulatory responsibilities and use its powers to mandate pricing interventions and a longer-term price cap to meaningfully lower fees and bring lasting reform to the market. Otherwise, the card schemes will continue to exploit their dominance, and retailers – and their customers – will continue to pay the price.”
The BRC pointed to the PSR’s own findings that the card market is not working well, with Visa and Mastercard having increased core scheme and processing fees by more than 25 per cent in real terms between 2017 and 2023, adding at least £170million a year in extra costs for UK businesses. It warned that without stronger action, such as direct pricing interventions, the dominance of the card schemes would continue to harm merchants and their customers.
A regulator in transition
The PSR’s consultation comes at a significant time for the regulator itself. The government announced earlier this year that it will absorb the PSR into the Financial Conduct Authority (FCA) later in 2025 as part of efforts to streamline the UK’s regulatory landscape.
The decision to consolidate the PSR into the FCA forms part of a broader government strategy to reduce regulatory burdens, simplify oversight structures and support economic growth.
Payment system firms have long complained that dealing with multiple regulators – including the PSR, FCA, and Bank of England – created unnecessary complexity and costs, particularly for smaller businesses trying to scale.
Although the PSR will continue to operate independently until Parliament passes legislation to enact the merger, the longer-term direction is clear: the FCA will take on greater oversight, leading to a more integrated regulatory framework in the UK payments sector.
For now, the PSR maintains its statutory powers and responsibilities, including its ability to impose remedies in the card payments market. However, the prospect of greater regulatory streamlining may influence future approaches to intervention, competition and transparency across the payments sector.
What happens next?
The PSR’s consultation on its proposed remedies will remain open until 28 May 2025. Stakeholders, including businesses, merchants, and acquirers, are encouraged to submit their views.
If the regulator decides to proceed with the remedies, it will launch a further consultation later this year, presenting a draft Cost Benefit Analysis and draft directions that set out how it plans to implement the new measures.
