Landmark ruling finds Visa and Mastercard breach interchange fees law

In a decisive legal blow to the global card giants, the UK’s Competition Appeal Tribunal (CAT) has ruled that Visa and Mastercard’s default multilateral interchange fees (MIFs) breach European competition law.

Visa and Mastercard breach interchange fees law

This judgment marks the latest development in a long-running legal saga over interchange fees, which are levied on retailers each time a consumer uses a debit or credit card to make a purchase.

Unanimous Ruling

The CAT’s unanimous ruling follows lawsuits brought by hundreds of merchants, represented by law firm Scott+Scott.

David Scott, global managing partner at the firm, described the outcome as “a significant win for all merchants who have been paying excessive interchange fees to Visa and Mastercard.”

Multilateral interchange fees – commonly known as swipe fees – are set by card networks such as Visa and Mastercard.

Acquiring banks, which process payments for merchants, pay these fees to card-issuing banks, passing the cost on to retailers as part of their merchant service charges.

Merchants have long argued that such fees are excessive and non-negotiable, effectively functioning as an imposed floor under their payment processing costs.

Intention to Appeal

Both card schemes have expressed their intention to appeal.

A Visa spokesperson stated that “interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks.”

Mastercard, meanwhile, described the decision as “deeply flawed” and confirmed it will seek permission to challenge the ruling.

Although the CAT ruling aligns with previous legal findings – including the UK Supreme Court’s 2020 decision that interchange fees restrict competition – it is the first time that commercial card and inter-regional MIFs have been ruled unlawful.

This widens the implications for cross-border corporate transactions and regulated capped fees alike.

Merchants Powerless

Scott+Scott highlighted that merchants remain powerless to negotiate these charges, with fees imposed centrally by Visa and Mastercard rather than determined through market competition.

Cian Mansfield, Head of Scott+Scott London, commented that the conduct of the schemes has “long penalised merchants,” adding that the tribunal’s recognition of their anticompetitive nature represents “an important victory for the retail and hospitality industries in Europe generally.”

The judgment follows similar global challenges.

In the United States earlier this year, Visa and Mastercard agreed a $30 billion settlement to resolve a 19-year dispute over swipe fees, reducing charges for US merchants for at least five years.

Separately, the US Credit Card Competition Act continues to seek regulatory reforms to break the schemes’ duopoly.

This UK ruling forms part of three trials addressing interchange and scheme fees.

A second ruling later this year will assess whether any overcharges were absorbed by merchants or passed on to consumers.

Scott+Scott has signalled its commitment to securing final redress for its clients, with litigation over scheme fees expected in upcoming hearings.