Visa and Mastercard face a fresh legal battle in
the UK after a London tribunal greenlit lawsuits brought by merchants alleging overcharges on interchange
fees, Reuters reported.
The Competition Appeal Tribunal ruled that collective lawsuits
against Visa and MasterCard can proceed.
This decision is pivotal, as it allows a
broad range of merchants to join forces in claiming damages. The lawsuits
challenge the multilateral interchange fees charged by the two payment giants
when consumers use their cards for purchases.
This is not the first time Visa and Mastercard have encountered legal challenges over such fees. The two companies have already been involved
in numerous lawsuits across the UK. These cases revolve around the fees known
as multilateral interchange fees, which retailers are obliged to pay whenever
customers use their cards.
Previously, the tribunal reportedly rejected the
certification of these cases under the UK’s collective proceedings regime,
similar to class actions in the United States. The decision was based on
concerns over the claims’ alignment and procedural requirements. However, the
tribunal has changed its stance, allowing the claims to move forward.
The tribunal’s ruling could have far-reaching
implications for Visa and Mastercard’s operational and financial strategies in
the UK. If the merchants succeed in proving their claims, the two companies
could face substantial financial liabilities. This development may also prompt
a reevaluation of their fee structures and payment practices.
With the tribunal’s decision, the next steps involve
detailed proceedings where evidence will be presented and examined. Retailers
across the UK are reportedly following this development as a favorable outcome
could lead to refunds and changes in how interchange fees are structured.
Transaction Fees and Cost of Doing Business
Last month, the UK’s payments regulator raised concerns about fee hikes imposed by Visa and Mastercard on retailers,
underscoring a lack of competitiveness in the payment card market. The
regulator said that despite the fee hikes, there was reportedly little evidence
that these costs have led to better services.
The Payment Systems Regulator (PSR) proposed new
measures to enhance transparency and competition. The regulators’ investigation
noted that over the past five years, the fees charged by these two companies
have increased by more than 30% after accounting for 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 increase has added over £250 million annually to the cost of business in
the UK. Mastercard and Visa accounts for 95% of UK-issued card transactions.
Besides that, 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.
Visa and Mastercard face a fresh legal battle in
the UK after a London tribunal greenlit lawsuits brought by merchants alleging overcharges on interchange
fees, Reuters reported.
The Competition Appeal Tribunal ruled that collective lawsuits
against Visa and MasterCard can proceed.
This decision is pivotal, as it allows a
broad range of merchants to join forces in claiming damages. The lawsuits
challenge the multilateral interchange fees charged by the two payment giants
when consumers use their cards for purchases.
This is not the first time Visa and Mastercard have encountered legal challenges over such fees. The two companies have already been involved
in numerous lawsuits across the UK. These cases revolve around the fees known
as multilateral interchange fees, which retailers are obliged to pay whenever
customers use their cards.
Previously, the tribunal reportedly rejected the
certification of these cases under the UK’s collective proceedings regime,
similar to class actions in the United States. The decision was based on
concerns over the claims’ alignment and procedural requirements. However, the
tribunal has changed its stance, allowing the claims to move forward.
The tribunal’s ruling could have far-reaching
implications for Visa and Mastercard’s operational and financial strategies in
the UK. If the merchants succeed in proving their claims, the two companies
could face substantial financial liabilities. This development may also prompt
a reevaluation of their fee structures and payment practices.
With the tribunal’s decision, the next steps involve
detailed proceedings where evidence will be presented and examined. Retailers
across the UK are reportedly following this development as a favorable outcome
could lead to refunds and changes in how interchange fees are structured.
Transaction Fees and Cost of Doing Business
Last month, the UK’s payments regulator raised concerns about fee hikes imposed by Visa and Mastercard on retailers,
underscoring a lack of competitiveness in the payment card market. The
regulator said that despite the fee hikes, there was reportedly little evidence
that these costs have led to better services.
The Payment Systems Regulator (PSR) proposed new
measures to enhance transparency and competition. The regulators’ investigation
noted that over the past five years, the fees charged by these two companies
have increased by more than 30% after accounting for 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 increase has added over £250 million annually to the cost of business in
the UK. Mastercard and Visa accounts for 95% of UK-issued card transactions.
Besides that, 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.
