What the PSR’s cartel fines in the prepaid cards market tell us

The Payment Systems Regulator has fined several parties to cartels in the prepaid cards market.

We have known that the PSR was going to take action since last year when it published its initial findings. Now we know the final figure of the settlement: over £33m spread between five institutions involved in market sharing arrangements in the provision of prepaid cards for public sector bodies.

This concludes a four-year investigation into the cartels. So, what have we learned?

• The PSR is flexing its muscles. The PSR is the economic regulator of payment systems as well as having concurrent competition powers. This is the first time it has imposed a financial penalty and shows that, as well as using tools to encourage innovation and competition in the sector, it is also prepared to take enforcement action. This case will likely embolden the PSR as it consider further investigations in the payments sector.
  
  
• This case was important because the pre-paid cards in question were used by local authorities to distribute welfare payments. According to the PSR, the cartels meant that there was less competition and choice for local authorities. Protecting vulnerable consumers is a priority not only for financial supervisors but also for competition regulators.
  
  
• There is unlikely to be further direct enforcement action relating to this case since all the parties have settled. Although this does not rule out the possibility of damages being sought down the line.

The PSR promises that more details on its decision will be released in due course.