Business Law & Compliance
MasterCard dishes out £39m to settle credit card fees lawsuit by Tesco
2 min read
31 July 2015
Tesco has received £39m from MasterCard in the first of an expected wave of settlements over interchange fee lawsuits filed by UK retailers.
In 1992, UK retailers complained about being overcharged for cross-border card transactions. It was later found – in 2007 – that MasterCard had been one of the companies restricting competition.
Earlier this month, EU regulators took action and issued a “Statement of Objections” against MasterCard. It accused the card company of using its rules to artificially inflate fees and of over-charging retailers for purchases made by non-EU cardholders.
The UK government has also commenced a consultation on interchange fee caps, which is set to come into force at the beginning of 2016.
There were almost 10.7 billion credit and debit transactions in Britain in 2013, and the British Retail Consortium has estimated that the caps could save UK businesses up to £480m a year.
Read more on payments:
- Majority of the UK’s shoppers willing to pay via wearable devices
- What will Apple Pay mean for British SMEs and the UK’s retail industry?
- Supermarkets fuel use of contactless transactions in the UK
In Britain alone, MasterCard is facing more than £1bn in damages claims from 20 businesses, such as Next and Tesco. The latter sued MasterCard in 2014 so that it could recover the “historic overpayment” of anti-competitive interchange fees.
It was recently handed £39m as part of a settlement agreement. The pay-out to Tesco was revealed by MasterCard CFO Martina Hund-Mejean during the company’s earnings call.
“We have been settling with Tesco, which is the largest merchant claimant in this litigation,” she said. “We are pleased that that is behind us.”
As well as the UK lawsuit, the EU sent MasterCard a complaint earlier this month, which could result in fines. Also, the Arcadia Group, Comet, Iceland and at least six other big nationwide chains have commenced legal proceedings against Visa in similar lawsuits.