Visa and Mastercard are facing a new set of lawsuits over fees charged to retailers. These two global payments processors have been sued by hundreds of claimants at London's Competition
Appeal Tribunal for multilateral interchange fees that retailers pay when consumers use a card to shop. A special purpose vehicle called Commercial and Interregional Card Claims (CICC) brought another set of lawsuits against Visa and Mastercard last year, seeking damages on behalf of merchants who were allegedly overcharged.
CICC is asking the tribunal to certify its cases under the United Kingdom's collective proceedings regime, which is similar to the class action regime in the United States. Michael Bowsher, CICC's lawyer, argued that claimants in its cases would include small businesses who had not sued Visa or Mastercard due to a lack of resources or their "risk appetite." Bowsher said that allowing CICC's lawsuits to proceed would "ensure that the benefits of justice and compensation are not limited to a narrow slice" of potential claimants.
However, Visa and Mastercard's lawyers argued that thousands of merchants have already sued them, which undermines the need for collective proceedings. Brian Kennelly, Visa's lawyer, said that more than 2,300 UK claimants are currently suing Visa, with more than 250 having a turnover of less than £5 million ($4 million). "These proposed collective proceedings are not, therefore, about providing access to justice to those who cannot seek it for themselves," he added. Mastercard's lawyer Sonia Tolaney also said the cases should not be certified, arguing that CICC's cases could disrupt existing lawsuits.
Visa and Mastercard have been facing a series of lawsuits in London over multilateral interchange fees since 2016. These lawsuits allege that Visa and Mastercard violated EU competition law by setting high fees for cross-border transactions between 1992 and 2018. In 2019, the European Union ordered Visa and Mastercard to pay €1.2 billion ($1.4 billion) in fines for these practices. Visa and Mastercard are also facing antitrust investigations in several countries, including the United States, Australia, and the European Union.
The ongoing lawsuits against Visa and Mastercard highlight the challenges faced by payment processors in balancing the interests of merchants and consumers. Merchants argue that the fees charged by payment processors are too high and cut into their profits, while payment processors argue that the fees are necessary to maintain the security and efficiency of the payment system. As the world becomes increasingly digital, payment processors will continue to play a crucial role in facilitating electronic payments. However, the regulatory and legal landscape for payment processors is likely to become more complex, as governments and regulators seek to balance the interests of different stakeholders in the payment system. Photo by Sang Hyun Cho, Wikimedia commons.