Update: On 3 November 2021 we published our final report.

This annex considers whether potential barriers to entry and expansion for providers of card-acquiring services might limit the ability and incentives of providers to enter or expand.

We consider something to be a barrier to entry and expansion where an entrant or smaller provider incurs a cost that a larger provider would not have to, thereby putting it at a disadvantage relative to the larger provider in being able to grow its business.

The focus of this annex is on whether there are significant barriers to entry and expansion to serving small and medium-sized merchants. This is because issues identified in Chapter 6 of the interim report primarily concerned this segment.

In this annex, we first consider the inputs for providing card-acquiring services as this helps us understand potential barriers to entry and expansion. We then consider a number of potential barriers to entry and expansion including:

  1.  scheme rules and scheme fees
  2.  other barriers – in particular:
    • economies of scale
    • regulation
    • referral relationships
    • restrictions on payment facilitators

This document should be read alongside:

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