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The UK’s Competition Appeal Tribunal (CAT) has approved the settlement in the long-running class action centred on fees the card network imposed between 1992 and 2008.
Former financial ombudsman Walter Merricks, who brought a lawsuit against Mastercard, hailed the approved settlement as “fair and just”.
The CAT gave its final approval to the £200m settlement on Tuesday (May 20).
It is the largest settlement of a group litigation for the benefit of UK consumers, although significantly less than the £14bn that Merricks had initially claimed on behalf of 46m people.
The settlement approval means that millions of UK consumers will be able to claim between £45 and £70 each from Mastercard — regardless whether they ever held a Mastercard card — simply by completing an online form.
To claim compensation from the card issuer, consumers must have lived in England, Wales or Northern Ireland for at least three months between June 1997 and June 2008, or in Scotland from 1992, and bought goods or services from UK businesses that accepted Mastercard credit cards.
It is expected that payments will be made to consumers who register before the end of the year.
Class action
Merricks brought the case in 2016 following the introduction of the Consumer Rights Act in 2015, which allowed for class action lawsuits in UK competition cases.
This was also after a 2007 ruling by the European Commission that the multilateral interchange fees Mastercard charged businesses were in breach of Article 101 of the EU Treaty, which prohibits direct or indirect fixing of prices or trading conditions.
The fees were paid by businesses taking Mastercard payments, but Merricks contended that the cost had been passed on to consumers in the form of higher prices.
Merricks said: “I started this case because I believed that Mastercard’s fees paid by retailers for processing card transactions had been unlawfully high and virtually all UK consumers had lost out for long periods paying higher prices than they should have done as retailers passed on those costs.”
He added: “The settlement that has today been finally approved represents a fair and just outcome for UK consumers. On any view, recovering £200 million by way of a settlement for UK consumers is a huge sum, and that will translate into a meaningful impact in the pockets of UK consumers.”
Mastercard declined to comment, but at an earlier hearing in February a spokesperson said: “We welcome the Tribunal’s decision. We will continue to focus on providing consumers and businesses with what they expect from Mastercard — a great payments experience, strong value and peace of mind.”
Tackling high card fees
Decades on from the period covered by the lawsuit, regulators in multiple jurisdictions continue to express concerns that the card networks continue to charge excessive fees.
As covered by Vixio, the UK’s Payment Systems Regulator (PSR) recently unveiled a set of new remedies in response to its conclusions that the UK card market is not working well.
In a consultation document, the regulator set out steps that it believes will help address concerns that the card schemes are charging excessive fees due to a lack of competitive constraints.
Meanwhile, a leaked document circulated by the French government and a commitment from members of the European Parliament (MEPs) show that card fees could also be on the agenda for the EU’s Payment Services Regulation (PSR).
A paper seen by Vixio and circulated with the European Council reveals that payment card fees are facing increased scrutiny from the French government.
And in July 2024, New Zealand’s Commerce Commission launched a consultation to examine whether locals are paying too much to make and receive Visa and Mastercard payments.
The regulator capped most interchange fees in the country in 2022, but has expressed the fear that they are still too high compared with those in other similar jurisdictions.
The consultation also raised the possibility of scrapping interchange fees altogether, although the regulator said it does not believe that this would be appropriate.
In December 2024, the regulator published a draft decision aimed at reducing the fees New Zealand businesses pay for accepting Visa and Mastercard payments.
The CAT’s approval of the Mastercard settlement fits with the trend for increased scrutiny of the fees charged by the dominant card networks.
As issues of payments sovereignty take on greater significance and alternative payment options such as central bank digital currencies (CBDCs) and open banking continue to make strides, the time when the card networks could charge high fees for their services may be coming to an end.
