Visa and Mastercard are being threatened with a potential £5 billion lawsuit for allegedly stifling competition and charging UK businesses excessive fees, The Guardian reported. The law firms Harcus Parker and Hausfeld have lodged an application at the Competition Appeal Tribunal in hopes of pursuing a group claim that would compensate companies who, they claim, have been overcharged on customer card payments since October 2020.

Source: The Guardian via ExecReview, Oct 26

The claim will centre on multilateral interchange fees, which are set by Visa and Mastercard and then paid by businesses through their banks every time a customer pays by card. The argument is that the lack of competition has left businesses at their mercy — and paying higher fees on debit, credit and prepaid cards — as a result, according to The Guardian. These are allegations in a proposed claim, not findings by the tribunal.

The case will hope to claw back fees charged over the past six years, as well as interest on those losses. Sources close to the claim estimate that it could be worth about £5 billion — yaani 500 crore pounds — based on the number of businesses allegedly overcharged between 2020 and 2026, The Guardian reported. Traders Union, reporting the same application, said the claim could cover about 1 million smaller companies, charities and other organisations.

Source: Traders Union, Oct 26

If the application is successful, an estimated 1 million UK-based businesses, organisations and charities with less than £100 million in revenues will be automatically included for compensation, unless they opt out, and their claims could be worth several thousand pounds each. Larger businesses would have to actively opt in and could be due tens of millions of pounds over the claim period, according to The Guardian.

A spokesperson for Mastercard defended the interchange fees, saying the potential group claim was 'speculative' and part of a 'growing trend of opportunistic funder-backed litigation', The Guardian reported. Spokespeople for both card networks defended the fees. The case is being funded by Bench Walk Advisors, a London-headquartered litigation finance firm, and is led by Stephen Allen, a former travel sector executive who has been pursuing related group actions against Visa and Mastercard since 2021.