In a major development, Mastercard has agreed to settle a class action lawsuit brought by over 1,900 U.K. businesses who accused the company of charging excessive credit card fees. The settlement marks the resolution of claims that Mastercard, in conjunction with Visa, levied unlawful multilateral interchange fees (MIFs) on businesses that accepted credit and debit card payments. These fees were allegedly too high and violated U.K. competition law.
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£25 Million Settlement Ends Allegations of Excessive Credit Card Fees for U.K. Businesses
The agreement brings closure to a long-standing legal battle that followed a U.K. Supreme Court ruling and the European Commission’s decision, both of which found that these fees were illegal. The class action lawsuit, which was certified by the U.K. Competition Appeal Tribunal (CAT), claimed that the excessive fees led to higher costs for businesses, which, in turn, passed those costs onto consumers. While the settlement resolves claims against Mastercard, it does not include Visa, which is facing separate legal proceedings.
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A Landmark Case for U.K. Consumers and Businesses
The class action, spearheaded by Walter Merricks, the former head of the U.K. Financial Ombudsman Service, represents an unprecedented effort to hold Mastercard accountable for allegedly overcharging U.K. businesses and consumers. The lawsuit claims that Mastercard imposed unlawful transaction fees from 1992 to 2008, impacting millions of people who made purchases at U.K. businesses that accepted Mastercard.
In 2007, the European Commission concluded that Mastercard’s multilateral interchange fees (MIFs) were in violation of competition law, as they led to inflated prices for consumers. As businesses struggled to absorb the fees, many were forced to increase the cost of goods and services, which ultimately affected consumers’ purchasing power.
The case initially sought compensation of up to £14 billion, a figure that has now been boosted by £2.7 billion in interest after the CAT allowed the legal team to amend the claim. The ruling also enables the lawsuit to proceed for claims related to consumers who have passed away since the litigation began in 2016. It is estimated that over 3 million claims could be eligible for compensation.
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Who is Eligible for Compensation?
The Mastercard settlement applies to U.K. consumers who made purchases from businesses that accepted Mastercard between 1992 and 2008. To qualify, individuals must have been aged 16 or older and a continuous U.K. resident for at least three months during this period.
If successful, class members could receive compensation, with estimates suggesting an average payout of £300 per eligible claimant. The settlement process will automatically include those who meet the criteria, with no additional action required on their part.
Next Steps for the Class Action
While the settlement has resolved the claims against Mastercard, the parallel proceedings against Visa remain ongoing. The legal team, led by Marie Demetriou QC and Victoria Wakefield QC, is working diligently to secure justice for those affected by unlawful credit card fees.
The CAT’s ruling provides a significant victory for U.K. consumers and businesses, sending a clear message that companies must be held accountable for anti-competitive behavior. As the case progresses, more updates are expected, and affected consumers are encouraged to stay informed about their eligibility for compensation.
Final Thoughts
The £25 million settlement is a crucial step in addressing the financial harm caused by Mastercard’s alleged unlawful fees, with the broader goal of ensuring fair pricing in the payment processing industry. As the case moves forward, the impact of this settlement will likely resonate across the financial and consumer protection sectors, offering a precedent for future class action lawsuits related to unfair fees and business practices.
Stay tuned for more developments as this case progresses, and ensure you’re aware of the potential compensation if you qualify as part of the class action.
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