The UK’s PSR published a Call for Input on 24 June 2015 on Card Payment Systems.

This is motivated by the PSR’s:

• concerns around card payment systems (such as indirect access, transparency, governance and how service-users are represented in decision making)
• interests in EU legislation on card payment systems – most notable the EC MIF Regulation, where the PSR is expected to be one of the UK’s lead regulators, and
• desire to learn more card payment trends and issues.

What is the deadline for responding?

5pm on Friday 31 July 2015. You can submit responses via cards@psr.org.uk or submitting a word & .pdf document to:

Payment Systems Regulator
Cards Programme Team
25 The North Colonnade
Canary Wharf
London E14 5HS

(Note the cover sheet in Annex 3)

What are the PSR’s Key Questions on Card Payment Systems?

1. Fees and costs sharing

Q1: Besides interchange fees, please identify and describe all other monetary transactions within card systems. This should include fees, fines, charges and similar, including rebates, incentives and bonuses. You should respond separately for transactions involving: a) Merchants b) Acquirers c) Payment facilitators d) Issuers e) Card partners f) Cardholders g) Any other relevant parties (please identify them when responding)

Q2: To what extent does the increment of the Merchant Service Charge over the interchange fee differ between merchants? What factors explain this? We seek views on the following questions. Please provide supporting evidence where possible.

Q3: How do you expect three- and four-party card system operators to respond to the capping of interchange fees on debit and credit cards?

Q4: How do you expect issuers to respond to the capping of interchange fees on debit and credit cards?

Q5: How do you expect acquirers to respond to the capping of interchange fees on debit and credit cards?

Q6: How do you expect innovation to be affected by the capping of interchange fees on debit and credit cards, if at all?

2. EC MIF Regulation business rules

Q7: Are there any business rules included in the IFR for which you would like greater clarity on how they will be interpreted? Please explain your response.

Q8: For each of the business rules included in the IFR, what are the key operational challenges that you will face in becoming and remaining compliant on an ongoing basis with the rules? Please provide evidence to support your response.

Q9: For each of the business rules included in the IFR, how long do you think it will take you to become compliant with the rules? Please provide evidence to support your response.

Q10: For each of the business rules included in the IFR, what do you expect the impacts to be on your business (in terms of costs, system changes, operational changes, etc.) and on other parties, including issuers, acquirers, merchants, consumers / cardholders, payment facilitators and card partners?

Q11: In your opinion, what would be an appropriate approach to monitoring compliance with each of the IFR business rules and why?

3. Governance

Q12: Do you think that there are any problems with the governance arrangements of card systems (including but not limited to how the interests of service users, including merchants, are represented in card systems’ decision-making, and whether there is sufficient transparency over operators’ decision making)? If yes, please explain the nature and basis of your concerns and provide any relevant examples of instances in which those arrangements have worked to your disadvantage or the disadvantage of some other parties.

Q13: To what extent do you consider that the rulebooks governing card systems are transparent and to what extent do you consider issuers, acquirers and service users, including merchants, can understand their contents?

Q14: Would any changes to the way in which card systems rules and requirements are communicated to service-users, including merchants, help to address any concerns identified in your response to Q13? Please explain your response.

4. Indirect Access

Q15: In your opinion, are there sufficient options for gaining access to card systems, either directly or indirectly, and is there sufficient information available on those options to enable PSPs to make informed decisions? Please explain your response.

Q16: In your opinion, are there barriers to securing indirect access to card systems? If yes, what are these barriers and what is the impact?

Q17: If you are a PSP which accesses a card system indirectly, please explain why you have chosen this means of access, as opposed to direct access.

Why respond?

Aside from it being good GR/ public affairs practice, there are some specific reasons why participants related to card payment systems should respond:

• The UK PSR is a new regulator taking a key role in card payment regulations, it is likely that they will be very interested to hear from a variety of interested parties. As merchant service charges have a significant impact on merchants as well as payment service providers, then corporates should also be encouraged to respond.

• This is an initial call for input that will help shape the discussion going forward. The PSR is keen to understand the pain points related to implementing the EC MIF business rules. If you have started to review its implications and require clarification etc – now is your chance to formally request it before the key requirements become enforceable.