Visa and Mastercard face a fresh legal battle in the UK after a London tribunal allowed lawsuits from merchants alleging overcharges on interchange fees, Reuters reported.
The Competition Appeal Tribunal’s decision permits collective lawsuits against Visa and MasterCard to proceed.
This ruling is significant as it enables a wide range of merchants to unite in seeking damages.
The lawsuits challenge the multilateral interchange fees that the two payment giants impose when consumers use their cards for purchases.
This is not the first time Visa and Mastercard have faced legal issues over these fees.
Both companies have previously been involved in numerous lawsuits across the UK concerning multilateral interchange fees, which retailers must pay whenever customers use their cards.
Previously, the tribunal had rejected the certification of these cases under the UK’s collective proceedings regime, akin to class actions in the United States, due to concerns over the claims’ alignment and procedural requirements.
However, the tribunal has now reversed its stance, allowing the claims to move forward.
The tribunal’s ruling could have extensive implications for Visa and Mastercard’s operations and financial strategies in the UK.
Should the merchants prove their claims, the two companies could face substantial financial liabilities.
This development might also lead to a reevaluation of their fee structures and payment practices.
Following the tribunal’s decision, detailed proceedings will ensue, where evidence will be presented and examined.
Retailers across the UK are closely monitoring this situation, as a favorable outcome could lead to refunds and changes in how interchange fees are structured.
Last month, the UK’s payments regulator raised concerns about fee hikes imposed by Visa and Mastercard on retailers, highlighting a lack of competitiveness in the payment card market.
The regulator noted that despite the fee increases, there was little evidence that these costs led to better services.
The Payment Systems Regulator (PSR) proposed new measures to enhance transparency and competition.
According to the PSR, over the past five years, the fees charged by Visa and Mastercard have risen by more than 30%, considering changes in transaction volumes.
In 2022, card transactions in Britain totaled 27.1 billion, amounting to £954 billion.
The PSR’s interim report estimates that the fee increases have added over £250 million annually to the cost of business in the UK.
Visa and Mastercard account for 95% of UK-issued card transactions.
Additionally, Visa and Mastercard recently agreed to pay $197 million to settle a class action lawsuit brought by millions of consumers for allegedly keeping cash access fees artificially inflated.