UK: Interchange Fees - Returns Or Recoveries?

Last Updated: 9 August 2017
Article by Deborah Sheldon
Most Read Contributor in UK, July 2017

Interchange fees are paid by merchant acquirers to card issuers as a percentage of each and every credit and debit card transaction. Acquirers pass these costs onto their merchants which may result in higher prices for consumers. Analysts have struggled to quantify these fees but estimate that they may come to some £2 billion per year in the UK alone.

The level of interchange fees varies according to products, their means of purchase and the jurisdictions involved. However, there are mechanisms in place to cap these fees. For example the EU's Interchange Fee Regulation (Regulation (EU) 2015/751) caps fees at 0.2% and 0.3% for most debit and credit card transactions respectively, within the European Economic Area.

These caps are the result of the 'Merchant Indifference Test' i.e. fees must be low enough to ensure that a merchant is not materially disadvantaged by accepting card payments.

The build-up

In 2007, the European Commission decided that the interchange fees applied by MasterCard to cross-border transactions (within the EEA) restricted competition between acquirers and inflated merchants' costs, without leading to any proven efficiencies (COMP/34.579).

Following multiple appeals, the ECJ confirmed the decision in 2014 (EU:C:2014:2201). However, in the meantime (during 2009) MasterCard reduced its cross-border interchange fees.

In 2010, following the EC's investigation into Visa's European interchange fees, Visa also reduced its cross-border interchange fees for debit cards. This was followed by the 'Visa Commitments' which were made legally binding by the European Commission and led to further capping and transparency measures applied to these fees in 2014.

In 2015, the EC opened another investigation into MasterCard, based on interchange fees applied to card payments made into the EEA (most of which were domestic transactions), acquiring merchants across borders and the business practices of the card scheme.

These investigations and undertakings laid the foundations for four key rounds of UK litigation that would follow over the next two years.

Round 1 – Sainsbury's claims damages from MasterCard

In July 2016, Sainsbury's Supermarkets built on the EC's decisions of 2007 and 2014 and recovered damages from MasterCard (Sainsbury's Supermarkets Ltd v MasterCard Inc [2016] CAT 11).

Sainsbury's alleged that MasterCard's interchange fees prevented acquiring and issuing banks from negotiating lower interchange fees. As a result, Sainsbury's claimed the difference between the interchange fees that it paid and the interchange fees that it would have paid, had the acquiring and issuing banks been free to negotiate. The Tribunal calculated the recoverable loss at some £68.6 million.

MasterCard has appealed the decision and is seeking to rely on further evidence.

Verdict: interchange fees above a certain level are liable to challenge in the UK.

During 2015 and 2016, both Tesco and WHSmith settled high value interchange fee claims against MasterCard and Visa. Whilst the details of the settlements are confidential, we anticipate these deals were based on the analysis applied in the Sainsbury's claim. It is likely that other confidential settlements have been reached on similar grounds.

Round 2 – Consumer Rights Act claim against MasterCard

In mid-2016, Walter Merricks (former chief Financial Ombudsman) led the UK's first group claim under the procedure introduced by the Consumer Rights Act 2015, on behalf of UK consumers (Case 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Inc and Others).

Merricks alleged that the interchange fees applied by MasterCard to cross border transactions between 1992 and 2008 (which were determined to be too high and anti-competitive back in 2007) resulted in increased costs to UK consumers. He claimed £19 billion (some £400 per consumer).

Last month the Tribunal decided that the claim would not proceed because it was not convinced that Merricks could evidence increased consumer prices.Verdict: forget millions, these claims may be worth billions. However, obtaining effective expert evidence will be challenging.

Round 3 – Asda seeks to recover fees from MasterCard

In January 2017, Asda and a number of household name retailers sought to recover £437 million in interchange fees from MasterCard (Asda Stores Ltd v MasterCard Inc [2017] EWHC 93 (Comm).

In a key departure from Sainsbury's allegations, Asda et al claimed that interchange fees at any level were unlawful.

The Court decided that MasterCard's interchange fees restricted competition because they prevented acquirers from competing for merchants' business by offering fees below the level set by MasterCard (as per the EC and Sainsbury's decisions).

However, MasterCard successfully argued that if interchange fees were set at zero (as the claimants contended) the card scheme would collapse. Consequently, interchange fees (at least at some level) were objectively necessary.

In addition, the Court found that MasterCard's fees fell below the exemptible level for anti-competitive practice because they provided a number of economic benefits.

Asda is appealing the decision.

Verdict: interchange fees are necessary to enable card schemes to function and provide economic benefits. UK merchants may have to accept fees at some level.

Round 4 – High street merchants claim fees against MasterCard

A further group of 27 high street merchants have issued a further interchange fee claim against MasterCard and Visa for some £300m.

The specific details of the claim have not yet been made public. However, we expect the claimants to introduce different arguments to those seen in the Sainsbury's and Asda litigation. Service of pleadings is expected within the next few months, as are further claimants.

Verdict: interchange fees remain contentious and we expect to see more claims and new arguments in the future.


Merchants continue to see interchange fees as a route to recovery.

While the courts have accepted (in the Asda claim) that interchange fees are not intrinsically unlawful, it is the level of those fees that remains open to challenge (as per the Sainsbury's decision). Despite recent high profile settlements, merchants still have an appetite to take these claims to trial.

Stakeholders and lawyers will note the interplay between the Consumer Rights Act claim and the ongoing merchant litigation because sooner or later the courts will have to decide who has actually suffered the loss: the merchants or the consumers? MasterCard did raise a 'pass-on' defence to the Sainsbury's claim but this failed because:

1) There was no evidence of increased retail prices, let alone a causal connection between interchange fees and prices; and

2) MasterCard was unable to identify a class of purchasers in a position to claim damages.

So as far as the second limb of the defence goes, it appears the Consumer Rights Act 2015 and Mr Merricks may have combined to identify a multitudinous class.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.