Mastercard and Visa Face £4 Billion Legal Battle Over Multilateral Interchange Fees

UK Businesses Unite Against Mastercard and Visa in £4 Billion Lawsuit

Mastercard and Visa are under fire in the UK as they face a collective lawsuit over claims that they overcharged businesses on multilateral interchange fees (MIFs), with the total claims exceeding £4 billion. The lawsuit, which has gained approval from the Competition Appeal Tribunal, could have significant implications for the payment giants and the industries affected by these fees.

The Impact of Multilateral Interchange Fees

Multilateral interchange fees, often likened to a tax on businesses, have been a point of contention for years. These fees are charged to businesses by acquiring banks whenever a customer uses a commercial card for payment. Sectors such as retail, hospitality, and travel have been particularly hard-hit, with MIFs significantly inflating their operational costs.

The lawsuit covers a period from June 2016 to June 2022, and businesses that accepted commercial card payments during this time may be eligible to seek compensation. The action is spearheaded by Harcus Parker Limited, with Jeremy Robinson, a partner at the firm, emphasizing the importance of holding Mastercard and Visa accountable for what he describes as "unlawfully high" fees.

Backing from Trade Organisations

The lawsuit has garnered strong support from major trade organizations, including UK Hospitality and ABTA, which have highlighted the damaging impact of MIFs on businesses across the UK. These organizations argue that the fees have placed an undue burden on businesses, many of which are still recovering from the financial strains of recent years.

Legal Precedents and Industry Implications

This isn't the first time Mastercard and Visa have faced legal challenges over their fee practices. Both the UK Supreme Court and the Court of Justice of the EU have previously ruled against similar practices, setting a precedent that could influence the outcome of this case. If successful, the lawsuit could lead to significant financial compensation for the affected businesses and potentially reshape how these fees are imposed in the future.

However, while the potential for relief is substantial, it's important to note that in other markets, savings from such lawsuits have not always been passed on to consumers. The primary goal here is to recover the financial losses incurred by businesses and to prevent future exploitation by payment giants.

Mastercard's Response

In response to the lawsuit, Mastercard has firmly denied the allegations. In a written statement to Payments Cards & Mobile, the company stated, “We disagree with the basis of this claim. Businesses get real value when they choose to accept cards issued on our network, helping them grow their sales, ensure a guaranteed payment, reach new customers, and reduce fraud.”

As the legal proceedings move forward, all eyes will be on the outcome of this high-stakes battle, which could have lasting effects on the UK’s business landscape and the practices of the world’s largest payment networks.