We are proposing to carry out a market review into the supply of card-acquiring services following concerns that this market may not be working well for merchants, and ultimately consumers.

Here we set out draft terms of reference (ToR) for the market review, which are open for consultation until 14 September 2018.

What are card-acquiring services?

Card payment systems enable people to make payments using debit and credit cards when purchasing goods or services from a merchant. To accept card payments, merchants need to buy card-acquiring services.

Providers of card-acquiring services accept and process card payments on behalf of a merchant resulting in a transfer of funds to the merchant. Merchants can contract with acquirers or merchant facilitators to obtain these services.

The costs merchants incur for such services may ultimately be reflected in the prices they charge and the services they provide to their customers.

Why we are conducting this review?

Card payments are critical to the smooth running of the UK economy. They are a popular way for consumers to pay for goods and services, and their use is growing.

Stakeholders have raised concerns with us that indicate the supply of card-acquiring services may not be working well for merchants, and ultimately consumers. Our market review is prompted by these concerns.

As part of our work, we will examine how competition in the supply of card acquiring services operates, and the outcomes of the competitive process. This includes looking at the fees merchants pay for card-acquiring services and the quality of service they receive.

The key question we will explore is:

Is the supply of card-acquiring services working well for merchants, and ultimately consumers?

What this document contains

This document sets out the draft terms of reference for the market review, our consultation questions and outlines our next steps.

What happens now?

We are interested to receive feedback on the draft terms of reference, in particular the consultation questions set out in the document. We also welcome any evidence in support of your views.

What happens next?

After reviewing the comments on the draft ToR, we plan to publish the final ToR for the market review by the end of 2018. We will also set out our timetable of work in this final document.

Subsequently we will publish an interim report, presenting our analysis and preliminary conclusions for consultation. Where practicable and appropriate, we will also seek feedback on possible remedies to address any concerns identified.

After that we will publish a final report containing our confirmed findings and, where appropriate, the action we propose to take.

Please send your comments to cards@psr.org.uk or by post to:

Card-acquiring market review team
Payment Systems Regulator
12 Endeavour Square
E20 1JN

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