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The Competition Appeal Tribunal’s decision that Visa and Mastercard's multilateral interchange fees breach European competition law could lead to claims from retailers across the region and accelerate the adoption of alternative payment options.
The ruling, delivered on June 27, 2025 in response to linked lawsuits brought by hundreds of merchants, stated that the multilateral interchange fees set by both card networks are anti-competitive.
Multilateral interchange fees are charges that acquirers (the banks or payment processors working with merchants) pay to the consumer’s bank for each card transaction.
The card networks set these fees, which represent a significant part of the price merchants pay to be able to offer card payments.
As the ruling notes, merchants do not sign up directly to the scheme rules, which include the fees, but are affected by them through their contractual relationships with acquirers.
Critics have long argued that the interchange fees are excessive and that they damage competition by increasing costs for retailers and consumers alike.
David Scott, global managing partner of law firm Scott+Scott, which represented the claimants, said the ruling was “a significant win for all merchants who have been paying excessive interchange fees to Visa and Mastercard”.
Restricting competition
The Competition Appeal Tribunal’s ruling came after “Trial One” of a case brought by around 2,100 merchants that challenged the interchange fees the big card schemes charge when customers pay by card.
Trial One focused on the question of overcharging – whether or not the fees imposed by the card networks unlawfully restrict competition, and if they caused losses to merchants.
The tribunal examined whether the fees breach Article 101 of the Treaty on the Functioning of the European Union and/or the Chapter I prohibition in the Competition Act 1998, and, if so, to what extent.
It determined that the merchants had demonstrated that the default interchange fee rules, which set non‑negotiable minimum charges, constituted anti‑competitive agreements and that both Visa and Mastercard are liable for breach of statutory duty.
This judgment deals only with liability – Trials Two and Three are set to consider issues such as exemption claims and whether merchants passed on the extra costs to consumers.
A Mastercard spokesperson said that the organisation “strongly disagrees” with the decision, which they said is “deeply flawed,” adding that the organisation will seek permission to appeal.
Visa also said that it plans to seek permission to appeal, with a spokesperson stating, “Visa continues to believe that interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks.”
Alternatives to card schemes
The decision could have a substantial impact on the application of competition law to payment schemes in the UK and beyond, particularly in relation to non‑negotiable, collectively agreed pricing structures.
It may also lead to claims from retailers across Europe that have been paying what can now be considered excessive fees.
In a wider sense, though, it could change the payments landscape by accelerating a move away from card payments to alternative options.
The big US card networks’ dominance, which has allowed them to set their own fees, has drawn criticism in jurisdictions such as the UK and the EU.
UK financial regulators, including the Payment Systems Regulator (PSR), have promoted the adoption of alternative payment methods to reduce reliance on Visa and Mastercard.
These alternative options include peer-to-peer (P2P) payments, while open banking is becoming increasingly popular in the UK.
In addition, the rise of digital assets means that both central bank digital currencies (CBDCs) and stablecoins may become serious options for consumers.
The EU, in particular, has been vocal in its promotion of the idea of the digital euro, which it sees as a valuable alternative to the US card networks and the volatility of private cryptocurrencies.
European Central Bank (ECB) president Christine Lagarde has been a big advocate of the EU’s CBDC, recently noting that “accelerating progress towards a digital euro is a strategic priority”.
The EU is concerned by the dominance of the US card schemes, not only on the grounds of cost but also in terms of payments sovereignty in a time of growing geopolitical uncertainty.
In this context, Lagarde has argued that a digital euro “would help safeguard Europe’s bank-based financial and monetary system. Not only would it strengthen Europe’s strategic autonomy, but it would also ensure an innovative and resilient European retail payment system”.
The Competition Appeal Tribunal’s ruling may be a step on the path to a more diverse payments landscape in the UK and Europe more widely, which many market participants would consider a positive outcome.
