Visa and Mastercard Face Potential £5 Billion UK Class Actions Over Card Payment Fees

Visa and Mastercard are now facing two proposed class actions in the UK that seek as much as £5 billion in compensation over alleged unlawful card payment fees. For merchants, acquirers, and PSPs, the point is not the headline number; it is that interchange pricing is once again being tested in the UK’s Competition Appeal Tribunal.

1. The claims were filed by Harcus Parker and Hausfeld, and they challenge interchange fees on transactions involving consumer debit, credit and prepaid cards, according to Law360 and reports published Monday by the Law Society Gazette and the Guardian. The cases were lodged with the UK’s Competition Appeal Tribunal and could become among the country’s largest competition-related compensation proceedings.
2. The proposed litigation seeks damages for businesses that allegedly paid excessive transaction charges from October 2020 onward. According to the Guardian, the class-action structure would automatically include roughly one million businesses, organizations and charities with annual revenue below £100 million if the tribunal authorizes the proceedings, unless they opt out. Larger companies would have to join voluntarily.
3. The cases are being led by Stephen Allen, a former Portman Travel executive who has been pursuing legal challenges over card interchange fees since 2021. The proposed classes would cover businesses across the UK, from independent retailers to major national companies.
4. At issue are multilateral interchange fees set by Visa and Mastercard inside their payment systems. Merchants pay those charges through their acquiring banks when customers use payment cards, and the fees make up a significant part of the cost of processing card transactions. The claimants say the structure has restricted competition and pushed businesses to pay more than they would in a competitive market.
5. Mastercard rejected the allegations, saying interchange fees are essential to a secure and efficient payment system, and described the litigation as speculative and backed by third-party litigation funding, according to the Law Society Gazette. Visa made a similar defense, arguing that interchange fees support the broader payments ecosystem and benefit consumers, merchants and financial institutions, according to the Guardian.

The proceedings come on top of mounting legal pressure on the two networks in Britain. Earlier in October, a separate proposed class action sought more than £700 million over fees on transactions involving cards issued in the European Economic Area, with that case alleging that charges on certain cross-border payments rose substantially.