Mastercard has reached an agreement in principle to settle a £200 million legal claim brought on behalf of 46 million UK consumers over allegations of unfairly high card transaction interchange fees.
Mastercard agrees UK interchange fees settlement
The settlement marks a pivotal moment in the UK’s competition law landscape and a significant milestone for collective legal action under the Consumer Rights Act 2015.
The claim, led by consumer advocate and former financial ombudsman Walter Merricks, has been one of the UK’s largest class-action lawsuits.
Initially seeking £10 billion in damages, the case centred on accusations that Mastercard’s interchange fees over several years imposed undue costs on consumers.
Although the settlement figure is substantially lower than the original claim, it represents a meaningful victory for collective consumer rights.
A Legal Landmark
The legal battle against Mastercard has tested the UK’s ability to enforce collective actions for alleged breaches of competition law. It was made possible following a 2020 Supreme Court decision that allowed the case to proceed.
This ruling effectively breathed new life into the Consumer Rights Act 2015, which permits consumers to pursue collective redress for anti-competitive practices.
Mastercard stated it was “pleased to have reached an agreement in principle to put this case behind us,” while Merricks called the settlement a step towards “meaningful compensation” for consumers who come forward to claim damages.
A Global Context of Card Fee Scrutiny
The Mastercard case is part of a broader global effort to challenge card networks over interchange fees.
Both Mastercard and Visa have faced increasing regulatory and legal pressures over their dominance and the fees they charge merchants and consumers.
In the US, Mastercard and Visa agreed earlier this year to a $30 billion settlement to reduce swipe fees over the next five years.
Meanwhile, the UK’s Payment Systems Regulator has sought to reintroduce caps on online transaction fees between the UK and the EU after a post-Brexit surge of fivefold.
Implications for Future Litigation
The Mastercard case has paved the way for a surge in similar lawsuits, many backed by litigation funders.
High-profile claims have since targeted tech giants like Apple, Sony, and most recently, Microsoft, which is accused of overcharging businesses for Windows Server licenses.
This settlement underscores the increasing scrutiny on dominant players in payment systems and broader industries, setting a precedent for how collective consumer grievances may be addressed in the future.
As competition regulators continue to challenge entrenched practices, the ripple effects of this landmark case are likely to be felt across industries worldwide.
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