THE UK payments regulator has said there is "little evidence" that fee hikes by Visa and Mastercard on retailers have majorly improved their quality.

The Payment Systems Regulator (PSR) said in an interim report that it was considering mandating the US firms to provide greater reporting to the watchdog on their UK operations and requiring them to explain pricing.

The PSR found that over the last five years, Visa and Mastercard raised their scheme and processing fees by more than 30 per cent in real terms, estimating that the hikes had led to £250m in extra annual costs for UK businesses.

It added that firms have little choice but to pay these costs as Visa and Mastercard account for 95 per cent of transactions using UK-issued cards.

However, the PSR has for now spared Visa and Mastercard from price caps on their scheme and processing fees, stating it is "not an appropriate response, at the present time."

A Visa spokesperson said the fees reflect the "immense value" the firm offers to businesses. A Mastercard spokesperson said the payments sector "has never been more competitive".

(c) 2024 City A.M., source Newspaper