Mastercard are disputing the Payment Systems Regulators’ findings.

A Mastercard spokesperson says:

“We disagree with the findings of the PSR’s interim review. The payments industry has never been more competitive, which is reflected in the wide choice of payment options available to British consumers and businesses.

“Building and investing in the latest technologies, we power a first-class payments network which consumers, merchants and financial institutions can rely on. In its analysis, the PSR has failed to account for the significant investment required to provide a secure network which prevents billions of pounds of fraud each year.

“We consistently deliver on our core promise to people and businesses: providing ways to pay and be paid that are hassle and worry-free, secure and convenient. We will continue to work transparently with the PSR and demonstrate the significant value Mastercard and electronic payments bring to the UK economy.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Mastercard and Visa do not face effective competition when dealing with merchants and banks in the UK, Britain’s payments watchdog warns today, leading to higher prices.

The Payment Systems Regulator says, in a new, provisional report, that the supply of scheme and processing services “is not working well” for “acquirers” – the financial institution, such a bank, that acts as an intermediary between merchants and card payment networks.

The PRS warns that there is currently no effective competition preventing Visa and Mastercard raising prices – indeed, the two card providers have raised fees by more than 30% in real terms over the last five years.

“There is little evidence that the quality of service has improved at the same rate,” says the PSR, sternly.

UK businesses have little choice but to pay increased fees, it adds, as Mastercard and Visa cards account for 95% of transactions using UK-issued cards.

The PRS says:

In respect of core scheme and processing services, there is currently no effective competition to Mastercard and Visa.

In some optional services, competition and choice is limited and alternative providers, when present, cannot match the schemes’ one-stop shop solution for core and optional services.

Faced with this seemingly failing market, the PSR is seeking views – and also proposes a number of potential remedies to help businesses v

They include:

• improved transparency so that businesses and acquirers can make informed decisions and are more able to switch to alternative suppliers of optional services

• obligations on Mastercard and Visa to explain, consult on and/or document the reasons for price changes and the pricing of new services

• greater reporting of financial information to the PSR on an on-going basis to improve scrutiny of Mastercard and Visa’s UK operations going forward.

Also coming up today

The International Monetary Fund is in town in London today, to give its annual assessment of the UK economy.

IMF staff have been conducting an Article 4 visit in the UK – collecting economic and financial information, and discussing economic developments and policies.

This will be the final healthcheck on the nation’s economy before the general election, and the Fund will have put chancellor Jeremy Hunt’s fiscal plans tax cuts under their microscope.

Last month, IMF officials said their team would look closely at whether tax increases or spending cuts would be needed after the general election…..

The agenda

• 8am BST: Kantar’s index of grocery inflation

• 9.20am BST: Bank of England policymaker Randall Kroszner gives keynote address at London City Week on ‘balancing the productivity opportunities of financial technology and AI against the potential risks’.

• 11am BST: CBI’s industrial trends survey of UK manufacturing

• 11.15am BST: IMF to conclude its Article 4 assessment of the UK economy

• 6pm BST: Bank of England governor Andrew Bailey to give a lecture on “The importance of central bank reserves”