.svg)
Harcus Parker, a UK-based commercial litigation law firm, is to launch a second class action lawsuit against Mastercard and Visa on behalf of merchants.
The new claim, which has an estimated value of £7.5bn, will argue that any UK business that accepted payment by Mastercard or Visa branded debit or credit cards should be compensated for alleged overcharging of fees caused by the card scheme giants.
"The claim that we're launching and will be filed relatively shortly and is focused on consumer credit and debit cards," Harcus Parker partner Thomas Ross told VIXIO. “We're acting for the merchants that take those transactions."
These fees, which are known as Multilateral Interchange Fees (MIFs), are part of a charge paid for by merchants to accept payment by debit or credit card that goes to the card issuing bank.
According to Harcus Parker, they are estimated to comprise up to 90 percent of a typical business’ monthly bank charge.
However, other data suggests the interchange component of fees paid by merchants for accepting payment cards is lower.
Since December 2015, interchange fees in the UK have been capped for domestic transactions at 0.2 percent of total transaction value for debit cards and 0.3 percent for credit cards.
According to a recent Payment Systems Regulator (PSR) investigation into the UK’s card acquiring market, the average merchant service charge was around 0.6 percent in 2018. This data, which also includes uncapped corporate cards, claims that interchange accounts for around two-thirds of card acceptance cost to merchants.
Harcus Parker’s class action seeks compensation for businesses for fees charged by Mastercard and Visa on debit or credit cards.
The new claim will be in addition to a previous action filed by Harcus Parker to the Competition Appeals Tribunal (CAT) last year concerning Mastercard and Visa corporate and inter-regional card fees.
"We consider consumer debit and credit cards important, even if the levels of fee aren't as high as those on corporate cards," said Ross. "It is our belief that all of these fees are anti-competitive and unlawful."
The lawyer added that the firm is not suggesting that the service charge is unlawful. "But, we do believe that the interchange fee element of that service charge is."
"No decision has ever found a lawful level of interchange fee. The Interchange Fee Regulation, for example, has said that Visa and Mastercard can charge up to a certain amount, but specifically leaves open the potential for any interchange fee to be considered unlawful," he said.
"It very clearly leaves it arguable, and doesn't say that these fees are acceptable. We believe that these fees are anti-competitive and unlawful and the correct rate should be zero."
The law firm says the class action will be open to all UK businesses — big and small — who accept Mastercard and Visa consumer debit or credit cards.
Meanwhile, the claim period is from 2017 to the date of judgment award, or settlement, and will include interest.
Businesses with an average annual pre-COVID turnover of £100m or more will be invited to opt-in to the claim, while businesses whose turnover is less than £100m, who have registered online, will be automatically included unless they choose to opt out.
Mastercard and Visa have both previously settled several claims for overcharged interchange fees. The law firm believes businesses may still be eligible to join the claim even if they have previously settled a claim with Mastercard and Visa.
It will be reviewed by the CAT in April 2023 and, if successful, will proceed to full trials, which are planned to take place in 2024.
VIXIO reached out to Mastercard and Visa, but did not get a response by the time of writing.
