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Overcharging claim on Mastercard/Visa

Following the UK’s formal exit from the European Union at the end of 2020, Mastercard and Visa hiked interregional interchange fees payable by UK businesses to around 1.7 per cent of the transaction value. The card giants are set to be hit with a multi-billion pound legal claim alleging they used a loophole to overcharge UK businesses after Brexit, according to Harcus Parker, the law firm, bringing the claim.

The card companies committed in 2019 to cap interregional interchange fee for credit cards at 0.3 per cent in the EU. Interchange fees are levied by banks on businesses when customers pay by cards. The card giants are now facing a class action lawsuit on behalf of UK businesses affected by those “unfair and unlawful charges”, the law firm said.

“It is British businesses that now bear the brunt of that loophole being exploited and extended and our job is to get compensation back for that,” Harcus Parker partner Jeremy Robinson said. Mastercard and Visa were contacted for comment.

The claim is part of a wider class action against Mastercard and Visa which is about to be launched in the Competition Appeal Tribunal in London by Harcus Parker with the backing of litigation funder Bench Walk Advisors.

Harcus Parker said the value of the class action claim could reach £3.5 billion, but at a minimum it will be set at £1.5 billion. The first arm of the claim will focus on smaller British firms with sales of less than £100 million and will be run on an opt-out basis, meaning all affected companies will be automatically included in the class action. That claim is expected to be valued at £1.5 billion.

The second arm of the claim will operate on an opt-in basis, meaning companies will have to choose to be included in the claim. It will focus on larger businesses with basis in the European Economic Area (EEA) that have been affected by the fees charged by the card companies.

The claim is focused on Mastercard and Visa’s imposition of interchange fees on card payments by customers using UK corporate credit cards, and consumer credit and debit cards used between regions, the law firm said.

“All the larger businesses within the EEA are being charged interregional fees and commercial card fees, which we say they shouldn’t be. So, we’re encouraging businesses from across the whole of the EEA to join this class action,” Harcus Parker partner Tom Ross said.

He also said travel and leisure companies such as hotels and airlines were particularly likely to be affected by the fees. The EEA includes the 27 EU member states plus Iceland, Norway and Liechtenstein.

Although the UK has left the EU, it is still possible to bring claims for breaches of EU competition law in the UK for losses incurred by businesses up to the date of Brexit. Visa and Mastercard have faced a raft of litigation in recent years over transaction fees. The UK Supreme Court ruled in December 2020 that a £14 billion lawsuit against Mastercard on behalf of more than 46 million UK consumers could proceed to the next stage.

Mastercard’s executive vice-chair Ann Cairns slammed the claim, which she said was brought by “US-based lawyers and litigation funders primarily focused on making money for themselves, wasting both the court’s time and taxpayers’ money”.

Harcus Parker said it expects the claim filed with the Competition Appeal Tribunal will get a first hearing later in 2022. “There is real financial harm here and our job is to get that money back from the card scheme,” said Robinson of Harcus Parker.

Andy Jalil

The writer is our foreign correspondent based in the UK

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