Visa and Mastercard caught in legal storm over card fees

More than 100,000 British companies are to sue Mastercard and Visa over claims they charge fees on corporate credit cards at up to six times the maximum level.

A class action claim will be filed on Thursday with the Competition Appeal Tribunal (CAT) by boutique law firm Harcus Parker, on behalf of travel and hospitality businesses.

Lawyers claim that Mastercard and Visa are exploiting their dominant position in the market through a loophole that allows them to charge up to 1.8pc per transaction on corporate credit cards.

The UK introduced laws in 2015 that capped the charges, known as interchange fees, at 0.3pc for credit cards and 0.2pc for debit cards. But the rules did not apply to corporate credit cards, lawyers will claim.

A spokesman from Mastercard said: “We firmly believe that businesses of all size gain real value from the acceptance of cards issued on our network, and we are committed to helping our retail partners grow their businesses and encourage the adoption of ever more convenient, safe and secure ways to pay and get paid.” 

Visa declined to comment.

The travel and hospitality sectors are more exposed to corporate credit card charges because they provide services such as flights, hotels, food and drink to company employees.

Redress is estimated to run into the billions of pounds if judges find in the claimants favour.

Partners at Harcus Parker believe that more than 100,000 companies large and small could be entitled to compensation. 

Businesses in the travel and hospitality sectors that generate less than £100m in turnover will be automatically registered with the claim but given the opportunity to opt-out.

Companies with more than £100m of turnover will need to opt-in to the legal challenge.

The bid is being bankrolled by London litigation funders Bench Walk Advisors.

Mastercard and Visa have faced a number of legal challenges in recent years for fees charged before UK laws were changed.

In December, retailers including Levi and Superdry issued the credit card giants with legal writs alleging breach of competition law.

A month earlier a row broke out between Amazon and Visa. Millions of Amazon customers in the UK were set to be blocked from shopping on the website after it increased fees following Britain’s exit from the EU.

Days before a Jan 19 deadline for the ban to come into effect, Amazon changed tack.

Many businesses are aware of higher fees charged by American Express on purchases, but unaware of those levied on Mastercard and Visa corporate credit cards.

Amazon is not alone in taking the attack to Visa. US supermarket chain Kroger said in 2019 that it would no longer accept the firm’s cards at Smith’s Food & Drug chain, before lifting the ban months later.

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