Retailers are calling for action to end price gouging by card providers

Britain’s biggest retailers are calling for immediate intervention to prevent so-called price gouging by British banks and other major card providers.

According to the British Retail Consortium (BRC), card companies increased their fees again last year “without transparency or justification”.

Research by the Retail Association found that the total amount retailers paid to banks and card schemes rose by over 25 percent last year, adding £380 million in costs. These costs arise from the fees that businesses pay to credit and debit card companies.

According to the BRC Payments Survey, the total card fees paid came to £1.64 billion. It also found that the use of cash to purchase products increased for the second year in a row.

The consortium has reiterated its call for the payments regulator to “implement meaningful reforms to address the lack of competition and rising costs identified in its recent market reviews.”

Chris Owen, payments policy adviser at the consortium, said the Payment Systems Regulator (PSR) “must respond to the harms it has identified in its current market reviews.” It must act quickly to reform the market and Implement remedial measures, including price caps on fees and price adjustment measures.”

In May, the regulator published an interim report and consultation paper on its market review of card schemes and processing fees.

The PSR launched its review amid concerns that a significant proportion of previous increases in these acquirer fees could not be explained by changes in the volume, value or mix of transactions.

It is now seeking comments on its preliminary findings and proposed remedial approach to be incorporated into its final report.

A PSR spokesman said: “We analyzed system and processing fees as part of our market review and noted in May that these fees have increased significantly in recent years.” We also identified concerns about the transparency and quality of information provided available to those providing business mapping services.

“We have consulted on these concerns and proposed remedies, which would result in improved transparency for businesses, require Mastercard and Visa to provide more information about price changes and the pricing of new services, and increase transparency about the financial performance of systems in the United Kingdom would improve. We will publish our final report in the first quarter of 2025 and may provide further details on the measures we are considering to address any concerns about the functioning of the market for businesses.”

Separately, the BRC survey showed an increase in cash use for the second consecutive year to 19.9 percent of transactions last year, up from 18.8 percent in 2022.

Debit cards remained the most common payment method, increasing to 62 percent of transactions from 61.1 percent last year.