The UK’s Payment Systems Regulator has published an interim report on the supply of card acquiring services.
It shows that merchants could make savings by shopping around and either switching or negotiating with their current provider – but many small and medium ones don’t.
While many small and medium merchants may not be getting a good deal, the report found the market for card acquiring services works well for the largest merchants.
Why is this report important?
Card-acquiring services enable merchants – like a newsagent or supermarket – to accept card payments.
While card-acquiring services may not be something many consumers have heard about, the cost that merchants pay to use them will, for example, affect how much people pay for shopping. As more and more of us are using cards to make payments, it is increasingly important that the market is working well for everyone.
What the report contains
The PSR identified three areas of concern:
- on merchant contracts for card acquiring services
- on point-of-sale (POS) terminal contracts, and
- on the difficulty for merchants to compare prices.
The interim report includes several potential remedies to make it easier to search and switch for a new provider or better deal, including:
- Requiring all contracts for card-acquiring services to have an end date, providing a prompt for merchants to shop around.
- Requiring changes to POS terminal contracts to limit their length, ending contracts that auto-renew for successive fixed terms and making it easier to exit POS terminal contracts without incurring exit fees.
- Making it easier for merchants to research and compare prices and options available to them.
The full interim report can be found on the PSR website.
There are a number of annexes that accompany the report, along with a infographic on what happens when a consumer uses a credit or debit card.
The PSR are now consulting on the content of this interim report and are keen to get feedback on the proposed remedies.
The publication of the interim report will be followed by a consultation period of 12 weeks. The deadline for feedback is 8 December 2020.
After the PSR have considered this feedback and discussed it further with stakeholders, it plans to finalise the findings and publish a Final Report in 2021.