Mastercard victorious in UK interchange lawsuit
I fought the law and the law won
Mastercard can put a notch in the win column after a High Court judge ruled in the payment card network’s favor regarding a lawsuit brought on by retailers disputing cross-border interchange fees on debit and credit cards, reports Paybefore (Banking Technology‘s sister publication).
The ruling also could affect another lawsuit Mastercard is facing in which the plaintiff alleges Mastercard’s interchange is illegally high and is seeking billions of dollars in refunds for consumers (see below for further details).
In the lawsuit decided on 30 January 2017, retailers Asda Stores, Morrison Supermarkets and Next Retail, among others, accused Mastercard of overcharging stores when customers used credit and debit cards to pay. Retailers also claimed Mastercard’s interchange fees were anti-competitive and infringed on UK and EU law.
Justice Popplewell, however, concluded that Mastercard’s interchange rates were necessary for it to function as a company, didn’t restrict competition and, therefore, were lawful. The judge also decided that Mastercard’s rates were lower than the maximum allowed.
“The court recognised the immense benefits that retailers derive from our payment system,” according to a Mastercard statement. “In rejecting the retailers’ claims, it found that Mastercard’s interchange fees did not restrict competition and were necessary for the functioning of its payment system.
“In addition, the court carefully analysed Mastercard’s interchange rates for the entire period of the claim and found that those rates were significantly below the lawful level of interchange that could have been charged to the retailers for those benefits.”
The company said it remains “committed to our retail partners and will continue to focus on helping grow their businesses and encouraging the adoption of ever more convenient, safe and secure payments”.
The ruling doesn’t bode well for plaintiffs of another lawsuit against Mastercard involving 46 million consumers who allegedly paid higher prices due to card fees. The £14 billion lawsuit stems from former UK consumer financial services ombudsman Walter Merricks, who hired US-based law firm Quinn Emanuel to sue Mastercard under the British Consumer Rights Act of 2015, which enables class-action status. Merricks claims the payment card network’s interchange is illegally high and seeks refunds for consumers.
