Mastercard and Visa see UK legal claims from high street names mount over interchange fees

Oliver Gill
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MasterCard Settles With Retailers To Avoid Trial
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MASTERCARD and Visa are facing legal claims that could top £1bn as a raft of high street names pool their resources in a battle with the credit card giants over fees.

At the start of this month, litigation claims were launched by 27 high-street retailers, supermarkets, pubs and bookmakers over “multilateral interchange fees”, or charges retailers must pay to Visa and Mastercard when processing card transactions. In less than a week more than a 100 claimants had joined the class action. It is being led by boutique City law firm Humphries Kerstetter and funded on a no-win-no-fee basis by private equity firm Therium Capital.

City sources said aggregate legal claims would be in excess of £1bn.

The claimants allege what they were charged was in breach of domestic and European competition laws. This follows a European Commission decision in 2014 in which Mastercard was found to have infringed EU law by imposing different interchange fees on cross-border card transactions.

Similar cases over interchange fees have rumbled on for years in the US. But the first ruling in the UK was made last July, when Sainsbury’s was awarded £68.5m by the Competition Appeal Tribunal in a legal case against Mastercard.

However, in January hopes were tempered when a group of 10 retailers, which included Sir Philip Green-owned Arcadia and Asda, lost a separate High Court ruling against Mastercard.

Appeals have been filed on both cases. Meanwhile a separate claim, also led by Sainsbury’s, is due to be ruled upon.

The outcomes of these three cases are likely to shape the timing of the hearing which is being sought by Humphries Kerstetter.

Mark Humphries, a senior partner at Humphries Kerstetter said there were “many more” companies preparing to launch claims against Mastercard and Visa.

He added: “I am expecting the total number of claims to increase substantially and it would not surprise me if many of them were ultimately to be swept together into one huge piece of litigation, which should resolve the question once and for all.”

A spokesperson for Mastercard said: ‘We remain committed to our retail partners and will continue to focus on helping grow their businesses and encouraging the adoption of ever more convenient, safe and secure payments.

“A similar claim from a group of large UK retailers was recently rejected by the UK High Court in a clear and comprehensive judgment, because it concluded that Mastercard’s same interchange fees did not restrict competition and were necessary for the functioning of its payment system.

“It also found that those rates were significantly below the lawful level of interchange that could have been charged to the retailers for the benefits of using our payments network. As such, we see no basis for this claim.”

Visa declined to comment.

Therium, which is also funding a £3.9bn lawsuit brought by British road hauliers against truck manufacturers, is in line to pocket hundreds of millions of pounds if the proceedings are successful. The financing of the action allows the litigation financier a 25 per cent slice of payouts.

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