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The UK’s Cost Programs Regulator (PSR) proposed a value cap on cross-border interchange charges and is looking for remark on the extent at which the cap must be set.
The PSR is doing so after publishing a ultimate report on its market overview during which it discovered that Mastercard and Visa raised their cross-border interchange charges fivefold throughout 2021 and 2022 and that these hikes are costing U.Okay. companies an additional 150 million kilos (about $190 million) to 200 million kilos (about $253 million) per yr, the regulator stated in a Friday (Dec. 13) press launch.
“Our findings affirm that, attributable to a scarcity of competitors, Mastercard and Visa had been in a position to elevate cross-border interchange charges to an unduly excessive stage, costing U.Okay. companies a whole lot of thousands and thousands of kilos,” PSR Managing Director David Geale stated within the launch.
Reached by PYMNTS, a Mastercard spokesperson stated in an emailed assertion that the corporate welcomes the PSR’s willingness to collaborate with the trade on this subject and can proceed to have interaction with the regulator.
“The funds panorama is extra dynamic and aggressive than ever,” the assertion stated. “Synthetic controls on interchange don’t mirror the industrial actuality of at present’s market and, if not set on the proper stage, can negatively influence the worth folks and companies obtain from card funds.”
Visa didn’t instantly reply to PYMNTS’ request for remark.
In a assertion offered to Bloomberg, Visa stated it disputes the regulator’s findings.
“It will likely be essential to make sure that any measures don’t result in uncertainty and unintended penalties,” Visa stated, in line with the Bloomberg report.
The PSR’s announcement got here a day after Bloomberg reported that European lawmakers requested the PSR to rethink its plans to revive a cap on interchange charges that was lifted after Brexit.
Politicians and lenders inside the European Union stated this alteration would disproportionately have an effect on European banks and would be seen as “clear discrimination,” in line with the report.
Within the PSR’s Friday press launch, Geale stated the regulator “fastidiously thought-about” suggestions it had obtained.
“We contemplate that consulting on a variety of choices for capping costs is one of the simplest ways ahead to make sure U.Okay. companies get a greater deal,” Geale stated within the launch. “We look ahead to receiving proof on these proposals from all events.”
Suggestions may be given till Feb. 7, 2025.
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