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Any merchant accepting card payments in the UK can now bring a claim against card network operators under a ruling by the Competition Appeal Tribunal (CAT).
On Friday, June 7, the CAT certified a substantial claim by law firm Harcus Parker challenging the fees Visa and Mastercard charge UK businesses for accepting commercial card payments.
The claim alleges that Visa and Mastercard have imposed multilateral interchange fees (MIFs) on merchants, particularly in the travel and hospitality sectors, that are unlawful and have significantly harmed their businesses.
The CAT’s decision is procedural, meaning the claim is approved to move forward to trial for both Mastercard and Visa, and is not a ruling on the merits of the case.
However, this decision adds to the numerous lawsuits in London against the two firms over multilateral interchange fees.
Thomas Ross, a partner at Harcus Parker, told Vixio that formal certification is expected in about three weeks and this allows their claims to join a broad set of proceedings already underway.
The CAT, which was established by the Enterprise Act in 2002, originally refused to certify the cases in June 2023.
However, it allowed the lawyers to submit revised proposals at a later date.
“One trial on infringement or liability has already taken place, the findings of which we expect to benefit from. A further trial regarding pass-on will take place later this year, assuming that liability is established,” Ross said, pointing out that the claim put forward by consumer champion and former chief ombudsman at the Financial Ombudsman, Walter Merricks, is also part of this.
Unlawful and damaging charges
Ross said that the timeline includes three trials covering all the interchange claims. The first trial, which has already occurred, focused on liability, and the next trial will address pass-on, while the third will consider defences, such as countervailing benefits and objective justification.
“The defence will argue that although competition law was breached, the breach should nevertheless be allowed due to the benefits which accrue to the economy and merchants,” he explained. “This hearing is scheduled for next year."
Speaking about the case in the international perspective, Ross pointed out that there has already been a weighty settlement in the US involving Mastercard, covering all litigation including a reduction in fees.
In March 2024, Mastercard agreed to reduce US credit card interchange rates for at least five years as part of a legal settlement with merchants.
The settlement includes adjustments to Mastercard’s network rules that benefit small businesses and all merchants by allowing them to continue accepting electronic payments. It also ensures a simple and secure payment method for consumers.
The agreement, involving Mastercard, Visa and the court-appointed class counsel, provides all merchants with clarity and certainty regarding payment card acceptance.
What it means
“The issue at hand is the interchange fee which has, so far as I am aware, been found unlawful in every jurisdiction in which it has been adjudicated,” said Ross. “Since the schemes continue to charge this fee, there is ongoing action against them both in the UK and further afield."
However, he also pointed out that this is not a straightforward case. "The short answer is that the collective actions, which any merchant that accepts commercial card payments can join, will be certified.”
“We intend to do the same shortly for consumer cards,” he added. “This is a significant development, as there are millions of merchants in the UK who accept card payments. Many who haven't joined these actions previously can now participate.”
Ross added that Harcus Parker believes that there may be as many as a million UK merchants who are now able to join the claim.
This development follows last month's news that, despite evidence of a Visa and Mastercard duopoly in merchant services, the UK's Payment System Regulator (PSR) chose not to impose financial penalties on their fees.
Visa and Mastercard have disputed the findings.
