In a key decision, the UK’s Competition Appeal Tribunal (CAT) has ruled that the multilateral interchange fees (MIFs) charged by Visa and Mastercard to retailers violate European competition law.
This ruling, delivered in June 2025, marks a significant moment in the ongoing scrutiny of payment card providers and their pricing practices, potentially reshaping the financial landscape for merchants and consumers across the UK and beyond.
Interchange fees are charges levied by card issuers, such as Visa and Mastercard, on merchants for processing card payments.
These fees, typically a percentage of each transaction, are paid by the merchant’s bank (the acquirer) to the cardholder’s bank (the issuer).
While these fees facilitate the operation of card payment systems, they have long been a point of contention, with retailers arguing that they inflate costs, which are often passed on to consumers through higher prices.
The CAT’s ruling stems from a series of legal challenges brought by major UK retailers, including Sainsbury’s, Asda, and Morrisons, among others.
These merchants contended that Visa and Mastercard’s MIFs were anti-competitive, restricting price competition and imposing undue financial burdens.
The cases, some dating back over a decade, have been closely watched as they address fundamental questions about fairness and transparency in the payments industry.
The CAT’s judgment found that Visa and Mastercard’s MIFs breached Article 101 of the Treaty on the Functioning of the European Union, which prohibits agreements that restrict competition.
The tribunal concluded that the fees were not objectively necessary for the operation of the card schemes and that their levels were not justified by the benefits provided to merchants or consumers.
This ruling applies specifically to the UK’s domestic transactions but carries implications for cross-border payments as well, given the precedent it sets.
The tribunal’s decision builds on earlier regulatory efforts, including the EU’s 2015 Interchange Fee Regulation, which capped fees for consumer debit and credit card transactions.
However, the CAT’s ruling goes further, declaring that Visa and Mastercard’s fee structures were inherently anti-competitive, regardless of the caps.
The tribunal highlighted that the fees lacked transparency and were set in a way that prevented merchants from negotiating or seeking better terms, effectively locking them into a costly system.
The ruling is a significant victory for retailers, who could now seek substantial damages from Visa and Mastercard.
Estimates suggest that the total claims could run into billions of pounds, covering overcharges dating back years.
For merchants, this could translate into lower operational costs, potentially enabling more competitive pricing.
However, the extent to which these savings will be passed on to consumers remains uncertain, as retailers face their own pressures from rising inflation and supply chain challenges.
For consumers, the ruling could lead to indirect benefits, such as lower prices or improved services, if merchants reinvest savings.
However, there is also a risk that card issuers might offset losses by increasing other fees, such as annual cardholder charges or interest rates, which could affect consumers directly.
The broader impact on the payment ecosystem will depend on how Visa and Mastercard respond, whether through appeals, fee restructuring, or negotiations with regulators.
Visa and Mastercard have expressed disappointment with the ruling, with both companies indicating they may appeal.
They argue that their fees are essential for maintaining secure, efficient, and widely accepted payment networks.
The companies also point to investments in fraud prevention and technological innovation as justifications for their fee structures.
Meanwhile, the UK’s Competition and Markets Authority (CMA), which has been monitoring the payments sector, welcomed the ruling as a step toward greater fairness.
The CMA has been increasingly active in scrutinizing digital and financial markets, and this decision aligns with its broader push to curb anti-competitive practices.
The CAT’s ruling is unlikely to be the final word.
Appeals could prolong the legal battle, potentially reaching the UK Supreme Court or even the European Court of Justice, given the ruling’s reliance on EU law.
The decision also raises questions about the post-Brexit application of EU competition rules in the UK, adding complexity to future proceedings.
For now, the ruling sends a clear signal to payment providers: anti-competitive practices will face robust scrutiny.
It also empowers merchants to challenge entrenched financial structures, potentially fostering a more competitive payments market.