The UK's Payment Systems Regulator (PSR) will examine rising credit card fees charged by Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA).
The watchdog said it will carry out two market reviews focusing on card fees - one looking at scheme and processing fees and the other at cross-border interchange fees.
The reviews focus on Mastercard and Visa as these two card payment system operators account for 99% of debit and credit card payments in the UK.
On scheme and processing fees, the PSR said it is carrying out the review because its card-acquiring market review (CAMR) found the fees paid by acquirers had increased significantly from 2014 to 2018.
In addition, cross-border interchange fees have also increased significantly in the last year. This affects fees for certain card transactions between the UK and the European Economic Area.
Since the UK left the EU, Visa and Mastercard have increased these fees five-fold. The PSR said it wants to understand the rationale behind these increases and whether they are an indication that the market is not working well.
Last year, Amazon.com Inc (NASDAQ:AMZN) threatened to stop accepting purchases made with Visa credit cards issued in the UK, as part of its push back against transaction fees.
"We’ve been gathering information since the start of this year and have identified that a detailed review of the market is needed," said Natalie Timan, head of strategy at PSR.
"We have set out what we will assess in these reviews, which will then inform any decisions on the steps we might need to take to promote effective competition or to address any harm."
The draft terms of reference for the market reviews are open for public comment until August 2.