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Card payment fees must be more transparent, says regulator

The Payment Systems Regulator (PSR), the UK's regulator and competition authority for payment systems, yesterday published draft guidance on how it will monitor and enforce newer elements of the EU Interchange Fee Regulation (IFR) which comes into effect in June 2016.

The IFR will introduce improved transparency around card payment fees for companies operating in the UK. The PSR explains that acquirers – companies that process card transactions on behalf of merchants – must clarify what costs make up the fee for each transaction, known as the Merchant Service Charge (MSC).

In its statement, the PSR noted: “The MSC essentially packages up several costs charged for each card transaction and passes them onto the merchant in one fee. However, acquirers are not currently required to explain to a merchant what makes up this charge.”

“The lack of clarity as to what is included in the merchant service charge means that companies find it harder to negotiate on fees and are less likely to see reduced costs passed on to them. In turn, merchants cannot then pass these savings to their customers,” said the PSR's Hannah Nixon.

The draft guidance on the IFR can be found on the PSR website. The PSR is requesting feedback on the consultation to be submitted by 5.00pm on Friday 8 July 2016.

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