The U.K.’s payments watchdog has called for reforms that would increase competition in retailer’s card services amid a rise in cashless transactions stemming from the pandemic.
As Reuters reported Wednesday (Jan. 26), the Payment Systems Regulator (PSR) said its reforms, which are available for public review until April, will address the lack of transparency in the fees charged to retailers by companies handling their card payments.
“We invite industry to develop detailed proposed specifications for the remedies we describe and for any other measures they wish to propose,” the PSR wrote in its consultation paper.
The reforms would also deal with indefinite contracts and contracts that discourage provider switching, providing some relief for retailers. According to Reuters, the U.K. has around 157 million credit cards, with consumers making 15.5 billion debit card payments in 2020.
The news outlet notes that the five biggest card “acquiring” services — Barclaycard, Elavon, Lloyds Bank Cardnet, Global Payments and Worldpay — allow merchants to accept card payments from customers. In turn, the acquirers pay fees to international card payment systems such as Visa and Mastercard.
Under the PSR proposal, acquirers would give retailers standardized key price information and contact retailers when an initial contract is due to expire. From there, these companies would also send annual messages retailers reminding them they could consider other acquirers.
The reforms would also make sure acquirers could not prevent or discourage retailers from shopping around for and switching to new services.
Read more: UK’s Payment Regulator Prioritizes Direct Payments in Strategic Plan
The organization’s final remedies are set to be published later this year. Earlier this month, the PSR unveiled a five-year strategic plan to improve the payments sector.
The plan is broken into four areas of interest, two dealing with giving consumers guaranteed access to payment services and make sure they are protected when using them. The other two deal with encouraging competition between operators, payment service and infrastructure providers, and unlocking the potential of direct payments as card alternative.