Competition Appeal Tribunal rules that Visa and Mastercard’s Merchant Interchange Fee forced retailers to pay excessive payment card fees
LONDON – The UK Competition Appeal Tribunal today ruled that Visa and Mastercard’s Multilateral Interchange Fees (MIFs or interchange fees) amounted to an infringement of UK and Irish competition law. This is a significant victory for thousands of merchants located across Europe. The ruling in this case, led by the London office of Scott+Scott, is a landmark victory for its clients.
The judgment ruled in favour of Scott+Scott’s clients that the MIFs amount to a non-negotiable floor to the Merchant Service Charges which merchants have to pay to the banks that process their card payments.
Commenting on the case, David Scott, Global Managing Partner, Scott+Scott said: “Today’s judgment is a significant win for all merchants who have been paying excessive interchange fees to Visa and Mastercard.”
A MIF is a fee payable by merchants on all debit and credit card transactions. MIFs are not freely negotiated by the acquiring banks (the bank who administers the payment for the retailer) and issuers (the bank who administers a consumer’s money and payment cards) in consideration for services by the issuer. Instead, it is a fee imposed by Visa and Mastercard on acquirers, who have no choice but to pay it. The cost is then passed on to merchants who are powerless to negotiate it.
While this judgment is consistent with decades of preceding judgments and regulatory findings around the world, including a 2020 UK Supreme Court judgment, it is the first time that (i) Visa and Mastercard’s commercial card and inter-regional MIFs and (ii) regulated / capped MIFs have been found to infringe competition law.
“Visa and Mastercard’s conduct has long penalised merchants. Thanks to this hard-fought case, merchants can be satisfied that the Competition Appeal Tribunal recognises Visa and Mastercard’s conduct as anticompetitive and harmful. This is an important victory for the retail and hospitality industries in Europe generally and for clients specifically.” Cian Mansfield, Head of Scott+Scott London added.
This judgment is the first of three trials in these proceedings dealing with interchange fees. A second judgment on the question of pass-on (i.e. whether merchants or their customers suffer the harm) is expected later this year. While not an issue in this judgment, Scott+Scott are also challenging Visa and Mastercard’s imposition of so-called ‘scheme fees’ onto merchants, as is expected to be addressed in a later trial. David Scott concludes: “At Scott+Scott, we are committed to achieving a final resolution on interchange and scheme fees and recouping our clients’ losses.”