The Payments Systems Regulator (PSR) has said that it has not seen any evidence that the costs of operating payments services have increased for card issuers to warrant recent hikes to fees.

In October last year, Visa and Mastercard both increased cross-border interchange fees for debit and credit card transactions, from 0.2 per cent to 0.3 per cent and 1.15 per cent to 1.5 per cent respectively.

According to the regulator, the two companies account for 99 per cent of all card transactions.

The increase to fees has recently led to Amazon stop accepting Visa credit cards on its website.

The Treasury Committee, which published correspondence with the PSR this week, said that scheme fees – paid by companies to card payment operators for use of the service – have also jumped substantially. It said that average fees more than doubled between 2014 and 2018.

The PSR suggests that if there are no real prospects of improving competition in the card payment market, it would be willing to consider "additional regulation” to protect consumers and businesses from rising prices.

The UK watchdog also said that it intends to finalise its strategy and publish a remedies consultation on their market review in January.

“There have been significant increases in the fees businesses have to pay to use debit and credit card facilities in recent times,” said Mel Stride MP, chair of the Treasury Committee. “These impose an additional cost on businesses, many of whom are already hard pressed and facing financial difficulties due to the uncertainties of the pandemic.”

Stride added: “Given that Visa and Mastercard currently dominate this space, it’s vital to ensure that there is sufficient regulation and competition in the market so that businesses are not subject to ever-increasing servicing costs.

"My committee will be closely following the PSR’s plans to protect consumers and businesses from rising prices, and we look forward to exploring these issues in greater depth when they appear before the Committee in March.”

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