U.K. Court Rejects Mastercard, Visa Appeal on Swipe Fees

The landmark ruling affirms a lower court decision that the firms charged excessive credit and debit card fees.

June 19, 2020

LONDON—The U.K. Supreme Court rejected Visa and Mastercard’s appeal over assessing fees on retailers, Pymnts.com reports. The unanimous ruling this week supported a lower court’s decision that the credit card firms charged excessive credit- and debit-card fees. Sainsbury’s Supermarkets, along with other retailers, filed the initial suit in 2016, claiming the fees violated U.K. anti-competitive regulations.

“This marks the first substantial award in a competition damages claim in the U.K., and we believe in Europe,” said Sarah Houghton, a lawyer at Mishcon de Reya, which advised Sainbury’s on the case. “It has an importance well beyond the precedent it sets for claims against the Mastercard and Visa schemes.”

Mastercard indicated it would seek further court hearings to determine the key issues, most likely in 2021. Visa expressed its disappointment in the ruling. “Interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks. Visa supports the decision to send the matter to a specialist tribunal so the evidence can be properly considered,” Visa said in a statement to Pymnts.

Because of the decision, Sainsbury’s can now proceed to a trial for damages. “The fixing of interchange fees by Mastercard and its network members over many years was an unlawful infringement of competition law,” said supermarket attorney Kate Pollock.

“The merchants have succeeded on the major issues, and it leaves very little room for manoeuvre for Visa and Mastercard,” said Callum Godwin, chief economist for CMSPI, an independent, global payments consultancy. “This is a resounding victory for the merchant community—retailers now have a fantastic opportunity to issue claims off the back of this ruling. Further, this ruling could have major ramifications for interchange fees in the U.S. and worldwide.”

U.K. retailers have shelled out about $19.5 billion in interchange fees since 2012, according to CMSPI. The ruling comes after a 2012 U.S. settlement in which Mastercard and Visa said they would give U.S. retailers $7.25 billion. Last month, Visa announced it would halt proposed swipe fee hikes until April 2021, while Mastercard only delayed such increases until July due to the COVID-19 pandemic.