If your business accepts card payments, decisions made by the Payment Systems Regulator can affect the market in which your merchant account provider, acquirer and card schemes operate.
For merchants, some of the most relevant PSR work has focused on a straightforward problem: how easy is it for a business to understand what it is paying, compare providers and move elsewhere?
This has led to changes covering card-acquiring information, prompts to review the market and restrictions affecting certain card-terminal contracts.
The PSR has also investigated the scheme and processing fees charged by Mastercard and Visa, an area that ultimately contributes to the cost businesses face when accepting cards.
This guide explains what the Payment Systems Regulator does, which PSR measures matter most to merchants, and what businesses should actually look for when reviewing their payment provider.
What is the Payment Systems Regulator?
The Payment Systems Regulator, usually referred to as the PSR, is the UK economic regulator responsible for payment systems.
Its statutory objectives include promoting competition and innovation and supporting the interests of people and organisations that use payment systems.
This can involve areas such as:
- card-payment systems;
- access to payment systems;
- competition between payment providers;
- card acquiring;
- scheme and processing fees;
- interchange;
- account-to-account payments;
- Confirmation of Payee; and
- Authorised Push Payment fraud arrangements.
For most businesses accepting card payments, however, the PSR work most likely to be visible in day-to-day merchant services is its work on card acquiring, provider transparency, contracts and card-processing costs.
Is the Payment Systems Regulator being abolished?
The UK Government has announced its intention to consolidate the functions of the PSR within the Financial Conduct Authority.
However, that does not mean the PSR has already disappeared.
As of October 2026, the PSR remains operational and continues to publish regulatory decisions, consultations and other work.
HM Treasury confirmed in April 2026 that transferring the PSR's functions to the FCA will require primary legislation. The government said legislation would be brought forward when Parliamentary time allows.
The intention is broadly to transfer the PSR's payment-system responsibilities into the FCA rather than simply removing the regulatory framework that currently applies.
HM Treasury has also said that transitional arrangements will be needed for existing PSR requirements, legal instruments and guidance.
For a merchant reviewing an existing payment agreement today, the practical point is simple: current PSR directions and requirements should not be treated as if they have already ceased to apply simply because a future move to the FCA has been announced.
Why does the PSR matter to businesses accepting card payments?
Card processing can be difficult to compare.
A business might pay a combination of:
- transaction charges;
- interchange;
- scheme fees;
- acquirer or processor margin;
- authorisation fees;
- gateway charges;
- card-terminal rental;
- PCI-related charges;
- monthly service fees;
- chargeback fees; and
- other additional charges.
Different providers can also present these costs differently.
This makes it harder for a merchant to look at an existing statement, compare it with another quote and work out whether moving provider would actually save money.
The PSR's card-acquiring work has therefore concentrated heavily on transparency and switching.
The PSR card-acquiring market review
The PSR carried out a major review of the market for card-acquiring services.
Card acquiring is the part of the payment process that enables a business to accept debit and credit card transactions and ultimately receive the funds.
The PSR concluded that the card-acquiring market was not working well for merchants with annual card turnover below £50 million.
Among the issues identified were merchants not regularly searching the market, difficulties comparing providers and lengthy contracts for some point-of-sale terminals.
The PSR subsequently introduced a package of remedies intended to make it easier for businesses to understand their current arrangement and consider alternatives.
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The Card Payments Summary Box
One of the PSR's important card-acquiring remedies is the requirement for directed providers to give merchants clearer information about their existing card-acquiring service.
This is commonly referred to as a summary information box or Card Payments Summary Box.
The aim is to put important price and non-price information into a format that makes the merchant's existing arrangement easier to understand and compare.
Rather than relying only on an advertised transaction rate, businesses should use this information alongside their actual processing statements.
When reviewing your current payment costs, look at:
- total monthly processing cost;
- transaction charges;
- monthly and fixed fees;
- terminal charges;
- gateway charges;
- authorisation charges;
- additional service fees;
- contract terms; and
- any other costs that would change if you moved.
Our guide to merchant account fees explains how the different elements of card-processing costs fit together.
Why might your payment provider tell you to shop around?
Another part of the PSR's card-acquiring remedies requires directed providers to send certain merchants messages prompting them to consider shopping around or switching.
This can appear unusual. A business may understandably wonder why its existing provider is encouraging it to look elsewhere.
The reason is regulatory rather than promotional.
The PSR introduced these prompts because its research found many merchants remained with the same acquirer for long periods and did not regularly search the market.
Receiving a message does not automatically mean your current provider is expensive or unsuitable.
It is better treated as a prompt to review the arrangement.
That review should consider more than price, including:
- settlement speed;
- customer support;
- payment methods;
- gateway requirements;
- software integrations;
- reporting;
- chargeback handling;
- contract terms; and
- whether the provider still suits the business.
What is the PSR 18-month rule for card-machine contracts?
This is an area where the PSR rules are often oversimplified.
The PSR introduced a restriction affecting the initial term of qualifying point-of-sale terminal lease and rental contracts supplied in connection with card-acquiring services by firms covered by its direction.
Under the relevant PSR direction, the initial term is limited to a maximum of 18 months, followed by a rolling arrangement that can be terminated on no more than one month's notice.
This was introduced to reduce the risk of businesses being locked into lengthy terminal agreements that make switching acquirer more difficult.
However, this should not be interpreted as meaning:
"Every merchant services contract in the UK can only last 18 months."
That is not what the PSR direction says.
The rule relates specifically to qualifying POS terminal contracts within the scope of the direction. A merchant may also have separate agreements covering:
- card acquiring;
- payment gateways;
- EPOS;
- software;
- maintenance;
- other hardware; or
- additional payment services.
Those contracts need to be reviewed separately.
If you are trying to leave an existing arrangement, identify exactly which company supplied each service and which agreement contains the term you are trying to exit.
The PSR's investigation into Mastercard and Visa fees
The PSR's work has gone beyond merchant account contracts.
It has also investigated the scheme and processing fees charged by Mastercard and Visa.
These are not the same as the complete transaction rate shown on a merchant's statement.
Scheme fees relate to participation in and use of a card scheme, while processing fees relate to activities such as the authorisation, clearing and settlement of card payments.
Acquirers pay these costs within the wider card-payment system, and those costs can ultimately form part of what businesses pay for accepting cards.
In its final market review, the PSR reported that Mastercard and Visa had increased their core scheme and processing fees to acquirers by at least 25% between 2017 and 2023 in real terms. The PSR estimated that this resulted in at least £170 million of additional annual costs for UK businesses.
The regulator also identified concerns around the complexity and transparency of these charges.
What changed in 2026?
In July 2026, the PSR published final decisions implementing two remedies following its review of Mastercard and Visa scheme and processing fees.
Improved information and transparency
The first remedy is intended to improve the information available about scheme and processing fees so that acquirers, and merchants through their contractual relationships, can better understand the charges involved.
Pricing governance
The second requires improved governance around pricing decisions, including evidence and records supporting how those decisions are made.
These measures should not be interpreted as the PSR setting a standard merchant transaction rate.
Nor do they mean every business should expect an immediate reduction in its card-processing bill.
Merchant pricing still depends on factors such as:
- card mix;
- interchange;
- scheme costs;
- provider margin;
- transaction volume;
- payment channel;
- business type;
- international transactions;
- additional services; and
- commercial negotiation.
For a broader breakdown of current costs, see the UK Merchant Fees Benchmark.
Scheme fees, interchange and provider margin are not the same thing
Payment terminology can make regulatory announcements difficult for merchants to interpret.
A card-processing charge can contain several different economic components.
Broadly:
- Interchange is generally paid from the acquiring side of the transaction to the cardholder's issuing bank.
- Scheme and processing fees are charges associated with the card scheme and processing infrastructure.
- Acquirer or provider margin is the commercial amount charged by the business providing the payment service.
Depending on the pricing model, a merchant may see these separately or they may be combined within a blended price.
This distinction matters when assessing whether your costs have increased and determining which parts of the price your provider can actually negotiate.
Don't compare providers on one transaction rate
A lower headline rate does not necessarily mean a lower overall processing cost. Contracts, terminals, gateways, card mix, settlement and integrations can all change the result.
If you're considering a move, Merchant Advice Service can help you map the existing setup before exploring alternatives.
Review my payment requirements
What should businesses do with the PSR information they receive?
The PSR's remedies are most useful when they prompt a proper commercial review rather than an automatic switch.
If you receive a summary box, contract notification or message encouraging you to shop around, consider the following.
1. Check your real processing cost
Use recent merchant statements rather than relying on the rate originally quoted when the account was opened.
Look at the total amount paid against the value and number of transactions processed.
2. Separate your contracts
Establish whether acquiring, terminals, gateways and software are covered by one agreement or several different contracts.
3. Check notice and exit terms
Do not assume that changing one part of the payment setup automatically cancels the others.
4. Check integrations before switching
If payments connect to EPOS, booking software, a website, CRM, ERP or another system, establish whether the proposed replacement provider is compatible.
5. Compare settlement
A cheaper provider may not be commercially better if settlement becomes significantly slower or less suitable for your cash flow.
6. Compare like with like
A blended quote and an IC++ quote cannot always be compared by looking at one percentage.
Compare the likely total cost using your own transaction profile.
Do PSR rules mean you should switch payment provider?
No.
The purpose of greater transparency is to make it easier to review and compare the market. It does not mean every merchant should leave its current provider.
There are situations where staying with an existing provider may make sense.
For example, your current arrangement may offer:
- competitive overall pricing;
- important integrations;
- reliable settlement;
- strong support;
- specialist underwriting;
- complex recurring-payment arrangements;
- multiple merchant IDs or currencies; or
- technology that would be expensive to replace.
In other cases, significant growth in turnover, changing payment requirements or an old pricing agreement may mean there is value in benchmarking the market.
Our guide to comparing UK payment providers explains the wider factors businesses should assess.
Do all PSR card-acquiring rules apply to every payment provider?
No.
It is important not to treat every PSR direction as a universal rule covering every payment company, contract and merchant.
Some directions apply to specifically named or defined firms and can extend through arrangements involving their Independent Sales Organisations.
The scope of individual requirements can also depend on the service, contract and merchant concerned.
This is particularly important with the POS-terminal contract rules.
If you are relying on a PSR requirement when challenging a contract or charge, check the current wording and scope of the relevant direction rather than relying on a general summary online.
How Merchant Advice Service helps businesses review payment providers
Merchant Advice Service is not a regulator and cannot enforce PSR directions or decide whether a payment company has breached regulatory requirements.
Our role is different.
We help businesses understand their existing payment setup and the requirements a replacement provider would need to meet.
For a business reviewing its current merchant services, that can include:
- existing processor or acquirer;
- processing volume;
- current transaction costs;
- card-terminal requirements;
- online payments;
- payment gateways;
- settlement;
- contract concerns;
- EPOS or software integrations;
- recurring payments;
- business sector;
- underwriting requirements; and
- the reasons for considering a move.
We can then help identify payment providers that may suit those requirements.
This does not mean switching is always the right outcome. In some circumstances, understanding your current costs and requirements may give you a better basis for discussing the existing arrangement with your current provider.
You can also research companies directly through the Payments Directory® or explore merchant account providers.
Is it time to review your merchant account?
Tell us about your existing provider, how you take payments and what you would like to improve.
Merchant Advice Service can help you understand the requirement before exploring providers that may be suitable.
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Editorial & Commercial Disclosure
This guide is intended to explain Payment Systems Regulator developments from the perspective of a UK business accepting payments. It is not legal or regulatory advice.
PSR directions can apply to specific firms, services and contracts. Businesses relying on a particular regulatory requirement should check the current direction and, where necessary, seek appropriate professional advice.
Merchant Advice Service is an independent payments information and provider-matching service. MAS is not the Payment Systems Regulator, Financial Conduct Authority or an acquiring bank and cannot determine whether a provider has breached a regulatory obligation.
MAS may receive a referral fee or commission from some payment providers where a business proceeds following an introduction. This does not determine the factual information or provider-selection principles contained within this guide.
Payment-provider pricing, underwriting, contracts and final approval remain the responsibility of the relevant provider.
