The Payments Systems Regulator (PSR) published draft terms of its review into card-acquiring services provided by high street banks who accept and process card payments on behalf of a merchant for a fee.
UK Finance, which represents the sector, said acquirer fees are negotiated directly with the retailer and will depend on factors like volume of transactions and type of business.
The watchdog has powers to alter the sectors structure if it finds harm to customers.
The use of cards to buy goods and services became the most frequently used payment method in 2017 The PSR is proposing to carry out this market review having taken into account the concerns that have been brought to its attention, the watchdog said.
The regulator wants to ensure that the supply of card-acquiring services is competitive and works in the interests of merchants, and ultimately consumers.
A public consultation on the terms of the review is open until September 2018.
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