Visa and Mastercard abusing UK duopoly, say retail groups
UK-based retail groups have accused Visa and Mastercard of charging inflated fees during the coronavirus pandemic.
The British Retail Consortium (BRC) and British Independent Retailers Association (Bira) say that the major card companies have doubled prices since 2018.
Speaking to the BBC, the BRC’s head of finance policy, Andrew Cregan, says that the government must take action to curb “excessive” card costs.
Cregan claims that to increase card fees is an abuse of Visa and Mastercard’s dominant position in the marketplace. He says the two firms have merchants “over a barrel”.
The BRC is calling on the Competition and Markets Authority (CMA) to investigate the matter. It warns that if things don’t change, retailers my pass the costs onto consumers.
The issue of transaction fees has arisen due to the increase in card payment during the coronavirus pandemic.
Yet UK Finance data shows that in 2019 more than half of all payments in the UK were card-based.
It reports that out of 40 billion payments made that year, 30 billion were day-to-day transactions by consumers. Overall, cards were used in 51% of transactions.
2018 data from Statista shows Mastercard and Visa holding a 98% share of the UK market. Visa dominates among the pair, with 89% to Mastercard’s 11%.
Both schemes charge an interchange fee of 0.30% for credit cards and 0.20% for debit cards in the European Economic Area (EEA).
The BRC says an increase in scheme fees – 39% in 2017 and 56% in 2018 – are “clear demonstrations of an abuse of market dominance”.
A Visa spokesperson tells the BBC that it “has delivered to UK consumers some of the most secure and innovative payments solutions available anywhere in the world”.
Mastercard says that businesses benefit from “faster, more efficient, and secure payments”.