UK Payment Systems Regulator Launches Consultation on Supply of Card-Acquiring Services

The U.K. Payment Systems Regulator has launched a consultation on the PSR's proposed approach to assessing the profitability of card-acquiring service providers for U.K. merchants and consumers. The Consultation Paper may be of particular interest to providers of card-acquiring services, merchant trade bodies and merchants, as well as card scheme operators and issuers. Responses to the consultation should be submitted by August 1, 2019. Following the consultation, the PSR intends to publish a report setting out its interim conclusions on the supply of card-acquiring services.
 
Card-acquiring service providers accept and process card payments on behalf of a merchant (e.g. a retailer that accepts card payments for its goods). The PSR is conducting a market review of the supply of card-acquiring services amidst concerns about the market, including a lack of transparency around merchants' fees for accepting card payments and barriers to competition in the card-acquirer services market. The final terms of reference governing the scope of the review were published on January 24, 2019.
 
As part of its market review, the PSR will undertake an analysis determining the profitability of card-acquiring service providers, which will enable it to establish levels of competitiveness in the card-acquiring service market. The PSR's consultation is seeking feedback on the PSR's intended approach to this profitability analysis. The consultation paper explains that profitability will be measured on the basis of return on capital employed and gross profit margin. The analysis will focus on the profitability of the five largest acquirers supplying U.K. merchants from 2014 to 2018. The consultation paper also provides details of the methodology for calculating profitability and the adjustments that will be made to the accounting data submitted. It asks respondents to provide comments on its proposed approach and to consider in particular the following questions:
 

• Does the PSR have the right objectives for its profitability analysis, given the aim of the market review?
• Has the PSR selected suitable measures of profitability, given its objectives?
• Do stakeholders agree with the PSR's proposed approach to benchmarking and do they have views on how to establish a suitable range of values for comparison?
• Has the PSR identified all the material types of adjustment to data?
• Will the PSR's proposed process be adequate to generate a reliable analysis, given its objectives?

 
View the PSR's consultation paper.
 
View the Terms of Reference of the PSR's market review. 
 
View details of the Payment Systems Regulator's consultation on its market review terms of reference.
 
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