Card payment services market doesn’t work well for smaller retailers, report finds

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Many small and medium retailers “may not be getting a good deal” from the card payment services market, a new report reveals.

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The Payment Systems Regulator’s (PSR) interim report on the supply of card payment services, identifies three areas of concern: on merchant contracts for card acquiring services, on point-of-sale terminal contracts, and on the difficulty for merchants to compare prices.

The interim report includes several potential remedies to make it easier to search and switch for a new provider or better deal, including:

  • Requiring all contracts for card-acquiring services to have an end date, providing a prompt for merchants to shop around.
  • Requiring changes to POS terminal contracts to limit their length, ending contracts that auto-renew for successive fixed terms and making it easier to exit POS terminal contracts without incurring exit fees.
  • Making it easier for merchants to research and compare prices and options available to them.

Chris Hemsley, managing director of the PSR, said: “This is the first detailed review of this important market. While these services are not something many consumers will have heard about, the cost that merchants pay to use them will, for example, affect how much their weekly food shop costs. This review is also important because more and more of us are using a card to make a payment.

“Our interim report shows that while the supply of card acquiring services works for the largest merchants, most other merchants – particularly smaller ones – may not be getting a good deal. Many merchants do not shop around or look to negotiate with their existing provider, and so we’re proposing changes that could improve that. Now we want to gather feedback on those options and our findings to help us finalise our approach.”

The publication of the interim report will be followed by a 12-week consultation period of 12 weeks, which ends on 8 December 2020. After it has considered this feedback and discussed it further with stakeholders, the PSR will finalise its findings and publish a Final Report in 2021.