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Permitting Visa and Mastercard to challenge the Competition Appeal Tribunal’s (CAT) previous ruling returns the UK payments sector to legal volatility, leaving the cost of card acceptance an unsettled question as regulators promote alternatives.
The court’s decision to allow the US payment schemes to challenge the CAT’s June 2025 ruling that their multilateral interchange fees (MIFs) breach European competition law will be a blow to retailers and means continued uncertainty for the sector.
The case has significant implications for merchants, card schemes and the wider payments ecosystem, and signals that the fundamental legality of card scheme pricing is still up for debate.
MIFs are charges that acquirers pay to the consumer’s bank for each card transaction. The card networks set these fees, which in turn represent a significant part of the price merchants pay to be able to offer card payments.
Their legitimacy has been contested by merchants, which argue that they are forced to bear the main burden of the fees because they are passed on to them in the merchant service charges (MSCs) that they pay to acquirers.
As the June 2025 ruling noted, merchants do not sign up directly to the payment schemes’ rules, which include the fees, but are affected by them through their contractual relationships with acquirers.
Both Mastercard and Visa stated after the CAT’s 2025 ruling that they would seek to lodge an appeal, and the latest decision means that the question of whether MIFs unlawfully restrict competition remains unsettled.
A Visa spokesperson said: “Visa welcomes this decision. We continue to believe that interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks.”
Cian Mansfield, managing partner of Scott+Scott London, which represents the claimants, said: “This step is merely the granting of permission to appeal. We are confident that we will resist the application successfully at the substantive appeal.”
A longstanding debate
The debate over interchange fees has been underway for more than a decade, with merchant groups and policymakers arguing that they inflate the cost of accepting card payments and limit competition in the payments market.
In response, Visa and Mastercard have stated that these fees help to balance the incentives of issuers, acquirers and merchants, and support investment in security, fraud prevention and global acceptance.
The CAT’s 2025 ruling categorised MIFs as a breach of statutory duty, but the new appeal focuses on the counterfactual: the hypothetical world without these fees.
If the card schemes can prove that the payments ecosystem would be less secure or less efficient without MIFs, it would undermine the basis for merchant damages.
The Court of Appeal’s latest decision continues the argument, but follows a January 2026 High Court ruling that the Payment Systems Regulator (PSR) has the right to cap interchange fees on outbound card-not-present (CNP) transactions involving UK merchants and European Economic Area (EEA) issuers.
That decision removed a significant obstacle to one of the PSR’s most high-profile post-Brexit interventions in the payments market and signalled that even if the card schemes win in the Court of Appeal, their ability to set prices in the UK market is no longer guaranteed.
It has created a split landscape: although the card schemes may win on historical liability in the courts, they are losing the battle over future pricing autonomy to the regulator.
The direction of travel is towards greater control on card fees, and although judicial wins may offer temporary relief, regulatory caps are set to create a floor for card pricing.
International challenge
The UK litigation sits alongside broader international debates over the role of card schemes in payments infrastructure, with policymakers no longer content with broad caps and looking to target specific transaction components.
For example, in addition to the discussion of cross-border interchange fees in the UK and EU, several US states are targeting interchange fees on taxes and tips.
In 2024, Illinois passed the Interchange Fee Prohibition Act, which prohibits card issuers and networks from charging interchange fees on the tax and tip portions of credit and debit card transactions.
The constitutionality of the law has been challenged, but in February 2026, a District Court ruled that it is constitutional, meaning that it is now enforceable and financial institutions should be prepared to comply with its requirements.
Several states have sought to follow Illinois’ lead, with progress being made in Delaware and Colorado in the past month.
These developments create increased operational complexity, representing a shift toward “split-fee” logic and meaning that global processors must have the technical ability to exclude taxes and tips from the calculation in real time.
They now face compliance fragmentation, and systems that once handled uniform global pricing must be re-engineered to handle jurisdiction-specific logic at the point of sale.
Sovereignty and inertia
Another aspect of the debate on card fees is the increased focus on payment sovereignty. European authorities, led by European Central Bank (ECB) president Christine Lagarde, increasingly view the dominance of US-based schemes as a strategic vulnerability.
This has accelerated the push for sovereign rails such as account-to-account (A2A) payments, open banking and central bank digital currencies (CBDCs).
However, there is a glaring disconnect between regulatory ambition and consumer behavior: data from UK Finance shows that there were 2.4bn debit card transactions in the country during December 2025, up 0.5 percent from December 2024, along with 451m credit card transactions, up 7.9 percent.
This suggests that Visa and Mastercard’s networks remain central to the payments system, despite regulatory pressure and the rise of alternative rails.
We will not see any resolution to these questions during 2026. Instead, the payment schemes will continue to defend their historical fee structures in court while building the technical infrastructure to support a low-interchange, multi-rail future.
Although the Court of Appeal will be a boost for Visa and Mastercard, the increasing focus on sovereign payments and more granular regulation of fees suggests that they will have to work hard to maintain their position of dominance.
