The Payment Systems Regulator has launched a formal consultation on proposals that would force payment giants Mastercard and Visa to regularly report their domestic financial performance. The intervention is aimed at enabling the UK watchdog to closely monitor and assess corporate profitability over time, following deep regulatory concerns regarding escalating transaction costs.
The regulatory move follows a comprehensive market review conducted by the PSR into card scheme and processing fees. That investigation yielded evidence consistent with a finding that both Mastercard and Visa are enjoying profit margins significantly higher than what would be expected in a genuinely competitive market. The watchdog concluded that the two dominant payment schemes do not currently face effective competition. This lack of market pressure has allowed scheme and processing fees to rise steadily, while leaving businesses with insufficient transparency regarding the complex fees they must pay to accept card payments.
To correct this market imbalance, the PSR is proposing a targeted Regulatory Financial Reporting remedy. Developed after extensive engagement with both schemes, this framework is designed to generate robust, reliable data to evaluate ongoing profitability and determine whether the current fee structures are working fairly for British merchants. Under the proposed mandate, Mastercard and Visa will be required to provide a detailed profit and loss account specifically for their UK card operations, featuring relevant levels of financial disaggregation. Additionally, the firms must supply context-specific data to help the regulator fully understand the underlying drivers of their domestic financial performance.
Regulators emphasize that scheme fees have risen substantially in recent years without clear evidence that the hikes reflect actual increases in underlying operational costs. The new reporting rules are intended to provide the transparency needed to judge whether the card payment market is delivering fair outcomes for businesses and consumers, or if stronger regulatory interventions will be required. Following this consultation, the PSR plans to publish its final decisions and enforcement directions on related transparency and pricing governance remedies later this summer.
