The body that has spent the last two years prising open the cost of UK card payments is about to disappear as a standalone regulator. On 21 April 2026 HM Treasury confirmed it will abolish the Payment Systems Regulator (PSR) and consolidate its functions into the Financial Conduct Authority (FCA), and on 19 May the Financial Services and Markets Bill 2026-27 was introduced to Parliament to make it happen. For UK merchants who pay card-processing fees every day, the obvious question is whether a regulatory reshuffle changes anything that actually lands on their statement.

What the government has actually decided

In September 2025 the Treasury consulted on a "streamlined approach to payment systems regulation", and its April 2026 response confirmed the direction of travel: the PSR goes, and the FCA picks up its work. Crucially, the Treasury said it intends to maintain the substance of the PSR's objectives, so the FCA will remain responsible for promoting competition, innovation and the interests of payment service-users. The plan is to integrate those powers into the FCA's existing legal framework rather than bolt on a parallel regime. This needs primary legislation, which is why it now sits inside the Financial Services and Markets Bill working through Parliament.

One point matters for the near term: the PSR has not gone anywhere yet. It keeps its statutory powers and continues to operate until the transfer completes, and it has already published a 2026/27 work programme covering card fees, APP fraud and wider payments reform. Nothing on your merchant agreement changes on the day the Bill passes.

Why merchants should care about a regulator merger

It is tempting to file this under Westminster plumbing, but the PSR is the regulator that has been doing the unglamorous work merchants benefit from. Its market review found that Visa and Mastercard face limited competitive pressure and that core scheme and processing fees rose by at least 25% since 2017, an increase the industry estimates added well over £100 million a year to UK costs. The PSR is also behind the cross-border interchange caps and the scheme-fee transparency remedies now in train. The worry with any merger is that this hard-won momentum stalls while the two organisations integrate.

  • Continuity of the card-fee work: the value here is whether the FCA carries the interchange and scheme-fee remedies through to implementation, rather than letting them slip during the handover. The Treasury has signalled the objectives survive; the test is delivery.
  • A single front door: today payments sit awkwardly across the FCA, the PSR and the Bank of England. One regulator should mean less duplication and, in theory, faster decisions on the things that affect pricing and access.
  • Wider rule review: the Treasury is separately reviewing the Payment Services Regulations 2017 and the Electronic Money Regulations 2011, with a consultation expected this year. That is the deeper reform, and it will shape how PSPs and gateways operate for the next decade.
  • No change to your protections: APP-fraud reimbursement, safeguarding and the existing conduct rules continue. The reshuffle is about who holds the pen, not about tearing up the rulebook.

What this does, and does not, do to your costs

Be clear-eyed about the timescale. A regulator merger does not cut your effective rate next quarter, and any merchant promised an instant saving on the back of this news should be sceptical. The fees you pay are still set by the card schemes, your acquirer and your pricing model, not by the name on the regulator's door. What the consolidation can do over time is keep the pressure on scheme-fee inflation and transparency, which is where the real money sits for UK businesses.

That makes this a good moment to look at the part of your costs you can influence today. On blended pricing you pay a single all-in rate and any scheme-fee movement is absorbed by your acquirer, visible to no one. On IC++ pricing the wholesale interchange, the scheme fees and your provider's margin are itemised separately, so you can see exactly what you are paying for and challenge the margin without arguing the parts nobody controls. For higher-volume or premium-card businesses, that visibility frequently pays for itself.

The practical move while the rules settle

Regulatory change is slow; your own review does not have to be. Pull a recent statement, work out your effective rate (total charges divided by total card turnover), and ask your provider to show the same volume modelled on IC++. Check whether your contract lets the acquirer pass through scheme-fee rises on short notice, and what margin sits on top. These are the levers that move money this year, regardless of which regulator is in charge.

Monek is an FCA-authorised payment provider in our own right (FRN 920628), with blended pricing from 0.99%, transparent IC++ for businesses that want line-by-line clarity, next-day settlement, a free WooCommerce payment gateway plugin, native Xero integration and Virtual Terminal and Pay by Link for remote orders. If you want to see how your current card-processing fees stack up on real data while the regulatory picture settles, our team will run a no-obligation rate comparison and talk you through the options.