Law Firms File £5 Billion UK Competition Claims Against Visa and Mastercard Over Interchange Fees
Law Firms File £5 Billion UK Competition Claims Against Visa and Mastercard Over Interchange Fees #
Visa and Mastercard are facing two proposed collective actions at the UK’s Competition Appeal Tribunal (CAT), with combined claims estimated at up to £5 billion over allegations that the two networks imposed excessive interchange fees on British businesses for more than six years.
Law firms Harcus Parker and Hausfeld filed collective proceedings applications at the CAT on 26 October, targeting multilateral interchange fees (MIFs) charged on Visa and Mastercard consumer debit, credit and prepaid card transactions between October 2020 and October 2026. The action is led by Stephen Allen, a former travel industry executive who has brought several collective suits against the two networks since 2021, and is funded by litigation funder Bench Walk Advisors, according to Payment Expert.
The claimants argue that, because merchants have no practical alternative when customers want to pay by card, Visa and Mastercard face insufficient competitive pressure. That structural position, they allege, has allowed the networks to sustain fees at levels that caused material losses for British businesses.
If the CAT certifies the case for collective proceedings, the action would be structured as an opt-out class, automatically enrolling an estimated one million UK-based businesses, charities and other organisations with annual group revenues below £100 million, unless they actively choose to leave. Larger companies would need to opt in, but each could potentially reclaim tens of millions of pounds for the period in question. Individual smaller claims are expected to run into several thousand pounds each, according to Finance Feeds.
A separate, related claim has also been registered at the CAT targeting approximately 126,000 UK businesses over post-Brexit increases to fees on online payments made with cards issued in the European Economic Area. That action, brought on behalf of UK merchants who accepted remote payments from EEA-issued cards since October 2020, alleges that Visa and Mastercard raised cross-border interchange rates significantly following Britain’s departure from the EU’s regulatory framework.
Both networks have pushed back. Mastercard described the £5 billion claim as part of a “growing trend of opportunistic funder-backed litigation” and argued that interchange fees are essential to the smooth operation of the UK payments ecosystem. The company also pointed to UK government proposals, currently out for consultation, that would reform the opt-out system for collective competition actions, suggesting the claim was the type of litigation those reforms are designed to deter. Visa similarly defended its interchange structure as central to maintaining secure and efficient digital payments.
The proceedings are expected to take several years to conclude. The CAT must first certify the cases before any trial on the merits can take place, and no liability has been established at this stage.
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