Companies in the UK are set to receive improved transparency in connection with card payment fees, following the publication today of draft guidance by the Payment Systems Regulator (PSR).
The draft guidance lays out the way in which the PSR will monitor and enforce newer elements of the EU Interchange Fee Regulation (IFR) which are due to take effect in June this year. It provides details on how companies that process card transactions on behalf of merchants, known as acquirers, must clarify what costs make up the fee for each transaction, known as the Merchant Service Charge (MSC).
The MSC essentially bundles up various costs levied for each card transaction and passes them on to the merchant in one fee. However, acquirers are not currently required to explain to a merchant what makes up this charge.
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Commenting on the new draft guidance, Hannah Nixon, Managing Director of the PSR, said: “The lack of clarity as to what is included in the merchant service charge means that companies find it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.”
The draft guidance also provides clarity on co-badging and choice of payment brand or payment application, rules relating to the honouring of all cards, gathering initial compliance reports from relevant parties and investigating complaints about non-compliance with the IFR.
The publication of the draft guidance follows the PSR’s final guidance on the first phase of IFR that was in force by December 2015.