Hard-pressed businesses are facing additional costs from the rapidly rising fees charged by payment card companies, the head of an influential group of MPs has said.
The watchdog said that, while companies such as Visa and Mastercard have raised fees since Brexit, it has not seen any evidence that their costs have increased.
“There have been significant increases in the fees businesses have to pay to use debit and credit card facilities in recent times,” Mr Stride said.
“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.
“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.”
His comments came after the Payment Systems Regulator said in its letter to the committee that Visa has increased its fees on cross-border purchases from Europe by UK customers from 1.15% to 1.5%, while Mastercard has raised charges from 0.2% to 0.3%.
The companies were able to increase their charges after the UK left the European Economic Area (EEA) because fees had previously been capped under EU rules.
The PSR said: “We have not seen evidence that shows that there have been significant changes in the costs for issuers of enabling online transactions via EEA-issued cards in the UK, or UK-issued cards in the EEA nor following the UK’s withdrawal from the EU.
“Our proposed work will be looking more closely at the reasoning behind the recent increases and whether this indicates any themes or concerns that warrant action from us.”
Last year the regulator released a report which found that merchants in the UK did not have much choice when setting up a system so they can accept card payments. It is expected to suggest ways of dealing with this later in January.
On Thursday it also released a new strategy that will shape its plans over the next five years.
It includes an aim to introduce systems that will allow customers to go into a shop but pay, simply, through direct bank transfers into the shop’s account instead of using a debit card, which comes with fees.
“We will focus more on improving competition between payment systems, not just competition within payment systems,” said PSR managing director Chris Hemsley.
“This is important because we know that the future of retail payments is becoming increasingly about digital payments, most of which are currently made using card payment systems.
“That’s why a key priority is to unlock the potential of account-to-account payments to provide credible alternatives to card payments – which are used for billions of pounds worth of retail payments.
“Our work to boost competition will drive innovation and improve service quality, while helping ensure people and businesses benefit and stay protected.”