Stay informed with free updates
Simply sign up to the Financial services myFT Digest — delivered directly to your inbox.
Mastercard has reached an agreement in principle worth about £200mn to settle a legal claim brought on behalf of millions of UK consumers that the payments company imposed unfairly high fees on card transactions.
The groundbreaking case, brought by consumer champion and former financial ombudsman Walter Merricks, has been one of the country’s largest mass lawsuits and among the first of its kind to proceed under legislation that allows collective legal action over alleged breaches of competition law.
People with knowledge of the matter said the value of the proposed settlement in the case, brought on behalf of about 46mn consumers, was about £200mn. The claimants had been seeking £10bn in compensation for alleged overcharging over several years.
Mastercard and rival Visa have long been in global regulatory and legal crosshairs over the amount customers are charged to use credit and debit cards.
The two companies earlier this year agreed a $30bn settlement in the US over transaction costs that will lead them to lower the so-called swipe fees they charge merchants over the next five years.
Regulators in the UK have also sought to challenge the dominance of the two networks, which accounted for 95 per cent of all debit and credit card payments in the country in the past year.
The Payments Systems Regulator, the UK watchdog, set out plans a year ago to reintroduce a cap on card fees imposed on online transactions between the UK and EU after it found that these had risen more than fivefold since Brexit.
The long-running UK legal case against Mastercard in the Competition Appeal Tribunal had tested new ground in the legal system after the Supreme Court ruled in late 2020 that it could go ahead.
While the right of consumers to bring such collective actions was enshrined by the Consumer Rights Act in 2015, it was not until the Supreme Court judgment that the regime gained momentum.
In a statement on Tuesday, Mastercard said it was “pleased to have reached an agreement in principle to put this case behind us”.
Merricks said the proposed settlement would “deliver meaningful compensation” for consumers who come forward for damages.
The case against Mastercard has paved the way for a profusion of other suits — largely financed by specialist litigation funders — against other large companies, including Apple and Sony.
The latest high-profile claim in the UK was brought this week against Microsoft over claims the tech company overcharged businesses for licensing Windows Server.
Read the full article here