Visa and Mastercard face proposed £5bn UK card-fee claim

Visa and Mastercard face a potential £5bn legal claim over allegations that they restricted competition and charged UK businesses excessive fees for accepting customer card payments. Law firms Harcus Parker and Hausfeld have lodged an application at the Competition Appeal Tribunal to pursue compensation through collective proceedings, according to the Guardian.

The proposed action concerns alleged overcharging dating back to October 2020. It remains an application to pursue a group claim, rather than a judgment against either company, and the headline valuation should not be read as an agreed payment or an award of damages.

At the centre of the dispute are multilateral interchange fees, which Visa and Mastercard set and businesses pay through their banks when customers use cards. The Law Gazette reported that the proposed claims cover consumer debit, credit and prepaid cards, making the dispute relevant to businesses accepting several different forms of card payment.

The claimants’ central allegation is that insufficient competition has left businesses paying more than they should for those transactions. Their proposed remedy is compensation for the resulting alleged losses, rather than simply a challenge to how future payments are priced. Whether those allegations justify recovery remains to be determined through the proceedings.

The Law Gazette identified Stephen Allen, the former head of Portman Travel, as the proposed class representative. It reported that the proceedings are intended to encompass businesses of different sizes, reflecting the breadth of commercial activity that depends on accepting customer cards.

For businesses, the issue concerns the cost of completing sales, not the amount customers spend on the goods or services themselves. The Law Gazette reported that interchange fees are estimated to account for most of a typical business’s merchant service charge. That places the disputed fees within an operating expense incurred when businesses receive card payments.

Mastercard disputes the basis of the claim. In comments reported by the Law Gazette, the company defended interchange as supporting quick and secure payments and characterised the proposed litigation as speculative and driven by litigation funders. Its response directly challenges the claimants’ account of the fees and the purpose of the proceedings.

Visa also defended interchange, saying it supports secure digital payments, according to the Guardian. Those responses underline the opposing positions: the claimants allege excessive costs caused by restricted competition, while the networks maintain that interchange serves a necessary payments function.

The next issue is whether the tribunal permits the proposed collective proceedings to move forward. Approval to pursue a group claim would not itself settle the allegations or establish the compensation payable. For businesses, the application opens a possible route to recovery, but any eventual outcome remains dependent on the legal process.