Visa and Mastercard Sued for Billions Over Interchange Fee Practices

Visa and Mastercard are set to face a multi-billion pound class action lawsuit, led by commercial litigation firm Harcus Parker, over allegedly excessive interchange fees charged to merchants accepting commercial card payments. The claim, representing a wide range of businesses including retailers, charities, universities, travel and hospitality companies, and even football clubs, alleges that the global card giants have caused collective losses amounting to an estimated £4 billion.

The lawsuit centers on Multilateral Interchange Fees (MIFs), which are fees merchants pay to card-issuing banks when customers use their cards for payments. Class Representatives argue that Visa and Mastercard have imposed interchange fees that are unjustifiably high, acting as a “tax” on businesses and charities that accept payments through commercial cards.

Stephen Allen, Director of the Class Representatives, explains, “MIFs are like a tax on businesses and charities, increasing the cost of accepting commercial card payments. This claim enables justice for years of being squeezed by these global card schemes.”

The lawsuit further alleges that such practices have particularly harmed charities. “Thousands of people who donate online or support UK charity shops will be shocked and disappointed to learn how much money charities have lost because of excessive card fees,” Allen added, calling on Visa and Mastercard to stop “punishing” organizations that accept commercial card payments.

In August 2024, the Competition Appeal Tribunal granted permission for the class action to proceed, marking a significant step forward for the claims. Businesses with an annual pre-Covid turnover of less than £100 million will automatically be included in the lawsuit unless they opt out. Larger businesses with a turnover exceeding £100 million are invited to opt into the claim before the application window closes on 10 February.

This inclusivity allows the lawsuit to represent a broad swathe of businesses and organizations affected by the alleged overcharging. The case is poised to address both historical and ongoing financial harm caused by interchange fees, with the goal of securing compensation for the affected merchants.

Stephen Allen highlighted that similar practices by Visa and Mastercard have already faced condemnation by both the UK Supreme Court and the Court of Justice of the EU. These rulings have established legal precedents that support claims against excessive interchange fees, giving Class Representatives a strong foundation for their arguments.

The outcome of this lawsuit could have far-reaching consequences, not only for Visa and Mastercard but also for the global card payments industry. If successful, the claim could force the card giants to revisit their fee structures and implement changes to avoid similar legal challenges in the future.

One of the most significant aspects of this lawsuit is the impact on charities and small businesses, which often operate on tight budgets. The Class Representatives argue that the excessive fees levied by Visa and Mastercard have eroded profits, diverted funds from charitable causes, and placed an undue financial burden on organizations.

By seeking justice through the class action, the lawsuit aims to secure fair compensation for the affected entities and send a clear message about the need for greater transparency and fairness in card payment systems.

The claim process is in its final stages of preparation, with businesses invited to join the class action before the deadline on 10 February. With billions of pounds at stake, this case represents one of the largest class actions ever filed against the global card payment giants.

As Harcus Parker prepares to move forward with the lawsuit, the outcome could redefine how interchange fees are regulated and how card-accepting merchants are protected from excessive financial charges.