Visa and Mastercard face legal challenge over fees

The case affects card payments by tourists in the UK and corporate card holders.

The class action seeks compensation for UK businesses which were charged Multilateral Interchange Fees (MIFs) for accepting payments using corporate credit cards, as well as for credit and debit cards used by overseas visitors. 

The MIF is a percentage of the charge vendors must pay. A spokesperson for law firm Harcus Parker said: “The average vendor would not necessarily know what percentage they have to pay. Our case is that there should not be any MIFs.”

Since 2015, the EU has capped MIFs at 0.3% on consumer credit card transactions, and 0.2% for consumer debit cards. However, this cap did not apply to corporate cards or consumer card inter-regional transactions and these sales have continued to attract fees of up to 1.8%.

The Competition Appeal Tribunal has set a date in April 2023 for a Collective Proceedings Order hearing, which will determine whether the claim on behalf of a large number of businesses seeking damages for allegedly unlawful charges can proceed to a full trial. 

Harcus Parker claims Visa and Mastercard have forced banks to agree to a level of MIFs which are “anti-competitive and unlawful”. 

Harcus Parker’s competition litigation partner Jeremy Robinson said: “We want to ensure businesses across the UK economy are properly compensated. We are making a stand against unlawful interchange fees, which should be abolished. 

“Both the UK Supreme Court and the Court of Justice of the EU have condemned this practice for consumer credit and debit cards. The UK courts should now clamp down on commercial card fees and consumer card inter-regional fees.”

The law firm said MIFs make up the greater part of the service charges levied by banks on businesses when customers pay by card. It added: “Typically, for every £100 spent, up to £1.80 is charged on payments made by corporate cards, or cards used by overseas visitors – costs which are borne by companies throughout the UK.”

The initial hearing will begin on 3 April, with any trial likely in stages in 2024 and 2025.