Large businesses have less than two weeks left to opt into a ‘multi-billion pound lawsuit’ against payment giants Visa and Mastercard, commercial litigation firm Harcus Parker has warned.
Harcus Parker is arguing that businesses were unlawfully charged multilateral interchange fees (MIFS) on transactions – because these fees were set by the Visa and Mastercard card schemes themselves and not through a process of market competition.
Whenever a customer pays a merchant by card, the merchant’s bank will pay a multilateral interchange fee to the cardholder’s bank. This fee makes up the largest part of the ‘Merchant Service Charge’, which the merchant’s bank will charge the merchant in return for the right to accept card payment.
“MIFs are like a tax on businesses and charities, increasing the cost of accepting commercial card payments,” explains Stephen Allen, director of the Class Representatives. “This claim enables justice for years of being squeezed by these global card schemes.
“The 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. We hope Mastercard and Visa will stop punishing charities who accept commercial card payments by removing these onerous fees.”
Since 2015, UK law has capped the level of MIFs at 0.3 per cent on consumer credit transactions, and 0.3 per cent for consumer credit card transactions. These capped fees, however, exceed the competitive level of charge. For every £100 transaction, up to £0.30 is unlawfully overcharged by Mastercard and Visa on payments made by credit and debit cards.
Businesses with an annual pre-Covid turnover of £100million or more were first invited to join the ‘opt-in’ claim in September 2024 – but now, the deadline to do so (Monday 10 February) is looming.
Protecting businesses
Because Harcus Parker believes MIF is set in breach of competition law and causes businesses to bear unnecessary cost, it filed claims in the Competition Appeal Tribunal (CAT), the UK’s specialist competition court, on behalf of all merchants processing payments in the UK, seeking substantial damages.
On 9 August 2024, CAT granted the Collective Proceedings Order (CPO) authorising the Proposed Class Representative to continue the claim as a class action on behalf of eligible UK merchants.
Businesses with an annual pre-Covid turnover of under £100million are automatically included in the claim, unless they specifically choose to opt out. Businesses that choose not to be a part of either or both of the ‘opt-out’ claims against Mastercard and Visa, will not then be eligible to receive any compensation if this becomes available.
The claim runs from June 2016 to date. Damages continue to accrue until the date of judgment or settlement (plus interest) – meaning, if the lawsuit proves successful, Visa and Mastercard could be forced to pay billions in compensation.
Jeremy Robinson, partner at Harcus Parker Limited, representing the Class Representatives, added: “Hundreds of larger UK firms have just two weeks left to join this claim and seek their due compensation from Mastercard and Visa. Class action litigation is the best way to ensure Mastercard and Visa stop these unlawful charges on businesses.”
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