Top U.K. court rules in favor of merchants in interchange battle with Visa, Mastercard

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Merchants prevailed in a long-running legal battle with Visa and Mastercard in the U.K. over whether interchange fees the payment card networks charged for years in Britain were anticompetitive, which could increase scrutiny on U.S. card interchange rates.

Weighing arguments by London-based Sainsbury’s Supermarkets, the U.K.’s Supreme Court rejected appeals by Visa and Mastercard, unanimously ruling that multi-lateral interchange fees the card networks charged restricted competition, according to a Wednesday announcement.

Sainsbury's and other U.K. merchants may now pursue compensation through the Competition Appeal Tribunal. U.K. merchants have paid an estimated €19 billion (US$21 billion) in interchange fees since 2013, according to Alex Ellwood, head of merchant advisory at CMSPI, a global payments consulting firm, and they will be entitled to a percentage of that amount back as settlement.

“This is a landmark win for U.K. merchants. The ruling is a step in the right direction—it shines a glaring spotlight on excessive swipe fees in the U.S. and across the world,” Ellwood said.

Following years of court challenges that resulted in earlier adjustments in interchange, currently U.K. merchants pay approximately .2% per transaction in debit card interchange and .3% interchange for credit card transactions, according to CMSPI.

U.S. merchants pay just over 1% interchange on debit transactions and about 2% interchange for credit cards, CMSPI estimates.

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Interchange fees Visa Mastercard U.K.
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