LONDON, May 21 Reuters There is little evidence that big fee hikes imposed by U.S. duo Visa and Mastercard on retailers have led to a major improvement in service, Britain39;s Payment Systems Regulator said on Tuesday, flagging concerns competition was not working.

Visa and Mastercard have long dominated the market for payment cards, spurring UK lawmakers to call for closer scrutiny from the PSR, given that consumers end up paying the fees through higher prices for products and services bought.

Attempts in Europe to create homegrown rivals have floundered as banks balk at the investment cost. A report commissioned by Britain39;s government last year said the UK needs a digital alternative to the two U.S. payment processing networks.

The PSR found that over the past five years, and after taking account of volume changes, Mastercard and Visa have increased their scheme and processing fees by more than 30 in real terms. There is little evidence that the quality of service has improved at the same rate, the PSR said in a statement detailing its provisional findings.

Cards are the most popular form of payment in Britain, with 27.1 billion transactions in 2022 worth 954 billion pounds.

The PSR39;s 158page interim report estimates that the fee increases have added more than 250 million pounds 317.78 million annually to costs for UK businesses.

UK businesses have little choice but to pay these increased costs as Mastercard and Visa cards account for 95 of transactions…