PSR Directs Mastercard & Visa on Card Fee Transparency

The Payment Systems Regulator (PSR) has confirmed two specific directions requiring Mastercard and Visa to change how they charge and account for card scheme and processing fees in the United Kingdom, closing out the substantive remedies phase of its market review into those fees.

The directions address findings that acquirers have struggled to understand what they are being billed, why, and on what basis. Under the information, transparency and complexity remedy, the schemes must give acquirers materially clearer information on every fee applied: what the fee is, what triggers it, and how it is calculated. The stated intent is to allow acquirers to reconcile scheme billing against their own transaction records, identify charges they need not incur, and compare terms for optional services. Those costs are ultimately borne by merchants and, through pricing, by consumers.

The second direction, on pricing governance, responds to the PSR's finding that the schemes' internal pricing processes lacked visible rationale. Mastercard and Visa must now take into account the interests of the businesses reliant on their services when setting prices, and must keep clear records of the reasoning behind pricing decisions. That record-keeping obligation is the more consequential of the two for anyone who has tried to interrogate a scheme fee increase after the fact: it creates a documented decision trail where previously there was inference.

Implementation is staged. The pricing governance remedy takes effect within four months. The information requirements run over a twelve-month implementation period, reflecting the systems work required at the schemes. Both directions were given under section 54 of the Financial Services (Banking Reform) Act 2013, and each carries a materiality threshold of £250,000 in annual gross revenue, raised from the £100,000 net revenue figure originally consulted on.

David Geale, managing director of the PSR, said the measures would improve transparency, ease reconciliation for acquirers and strengthen accountability for scheme pricing decisions, and that the remedies had been refined following consultation to ensure proportionality.

A third remedy remains in train. Regulatory financial reporting would require Mastercard and Visa to report annually on the financial performance of their UK card businesses, giving the regulator a clearer view of fee trends and profitability and a basis for faster intervention if required. The PSR has consulted on the draft direction and guidelines and is progressing that work separately.

For acquirers and the payment service providers who sit behind them, the practical consequence is a better evidence base. Fee schedules that can actually be reconciled make anomaly detection tractable, support more defensible merchant pricing, and give firms something concrete to point to when scheme costs are challenged. Firms should also note that the Government intends to consolidate the PSR's functions into the Financial Conduct Authority (FCA), which is expected to assume responsibility for monitoring and evaluating these remedies in due course.