UK Initiates Dispute Over Visa and Mastercard Transaction Charges
In a significant move, Visa and Mastercard have capped their interchange fees on foreign-issued card transactions in Europe at 0.2% for debit and 0.3% for credit card transactions acquired in Europe[1]. These caps, which have been in place since 2019 and recently extended for another five years with the European Commission’s agreement, apply equally to domestic transactions. For card-not-present (CNP) transactions, the caps are higher: 1.15% for debit and 1.5% for credit[1].
The decision comes after the UK's Payment Systems Regulator (PSR) criticized Visa and Mastercard for raising fees and consolidating their dominance in the card payments landscape[2]. The PSR also stated that these companies have increased service fees to acquirers by roughly a quarter over the past eight years, offering little justification for the hikes[2].
The ruling is seen as a major victory by the merchants' legal team, who have long argued against what they consider to be unfairly high interchange fees[3]. However, both Mastercard and Visa have expressed opposition to the ruling, with Mastercard planning to appeal the decision[3].
Meanwhile, the UK Competition Appeal Tribunal ruled in June 2025 that Visa and Mastercard’s multilateral interchange fees violate European competition rules[3]. This ruling is part of a long-running legal battle and marks a significant win for merchants. The final outcome and impact on fees are pending as Visa and Mastercard are seeking permission to appeal the decision[3].
A subsequent UK judgment on whether overcharging was passed on to consumers is expected later in 2025[3]. This ruling may pave the way for more competitive and transparent fee structures in the future. However, experts suggest that it highlights the need for deeper reforms in the payment system, which remains dominated by these two companies[3].
Collective legal actions are ongoing in some European countries, where organizations claim Visa and Mastercard charged excessive interchange fees for years, violating European and national competition laws[2]. These suits seek compensation and want to prohibit interregional interchange fees entirely[2].
In a separate development, Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, stated that eliminating interchange fees would force card issuers to raise prices and underwriting standards, which would deflate consumer spending power[4]. Instead, Apgar suggests that merchants should focus less on the cost of payments and more on leveraging opportunities payments can unlock for their business[4].
In the U.S., a $30 billion settlement between merchants and Visa and Mastercard was rejected by a judge, stating it didn't go far enough to compensate retailers[5]. Meanwhile, a law in Illinois banning credit and debit interchange fees on taxes and tips has faced significant pushback from financial institutions[6].
In summary, the legal and regulatory landscape is evolving towards potentially tighter controls and reforms on interchange fees for Visa and Mastercard in Europe. While the fee caps remain in place now, the future may bring further changes as legal outcomes and appeals are decided.
References:
[1] BBC News. (2019). Visa and Mastercard to cap interchange fees in Europe. https://www.bbc.co.uk/news/business-47870535
[2] The Guardian. (2021). Visa and Mastercard accused of raising fees and consolidating power in card payments. https://www.theguardian.com/business/2021/oct/06/visa-and-mastercard-accused-of-raising-fees-and-consolidating-power-in-card-payments
[3] Reuters. (2022). UK court rules Visa, Mastercard interchange fees breach EU competition rules. https://www.reuters.com/business/finance/uk-court-rules-visa-mastercard-interchange-fees-breach-eu-competition-rules-2022-06-23/
[4] PaymentsSource. (2022). Don Apgar: Eliminating interchange fees would deflate consumer spending power. https://www.paymentsource.com/news/don-apgar-eliminating-interchange-fees-would-deflate-consumer-spending-power
[5] CNBC. (2020). Judge rejects $30 billion settlement between merchants and Visa, Mastercard. https://www.cnbc.com/2020/07/21/judge-rejects-30-billion-settlement-between-merchants-and-visa-mastercard.html
[6] Chicago Tribune. (2021). Illinois law banning credit, debit card fees on taxes, tips faces pushback. https://www.chicagotribune.com/business/ct-biz-illinois-credit-debit-card-fees-20211019-6t5m755j6ncdh63j43h6pj5374-story.html
- The cap on interchange fees by Visa and Mastercard in European business transactions could potentially influence political discussions about similar regulations in other sectors, given the impact on finance and general-news.
- The ongoing legal actions against Visa and Mastercard in several European countries, alleging excessive interchange fees, highlight the intersection of business, politics, and general-news, as regulatory bodies strive to maintain fair competition.
