Posted: October 10, 2025 | Updated: January 20, 2026 at 11:48 AM
Every time a consumer uses a credit or debit card, the merchant’s bank pays an interchange fee to the cardholder’s bank as part of the transaction cost. In Europe, consumer interchange fees are capped under the EU Interchange Fee Regulation at about 0.2% for debit cards and 0.3% for credit cards. Still, commercial cards and cross-border transactions (e.g., a US card used in the UK) typically incur much higher rates.
These fees are set by the card networks (Visa/Mastercard) and built into the merchant’s overall service charge. Retailers, in particular, refer to Visa/Mastercard’s setup as a “duopoly” – the schemes dominate roughly two-thirds of the EU market – and argue that the jointly set “multilateral” fees ultimately inflate costs. Merchants contend that because no individual retailer can negotiate down the payments, the rates are artificially high relative to a competitive market.
An interchange fee (or “swipe fee”) is the wholesale charge paid by a merchant’s bank to the cardholder’s bank every time a customer pays by card. This fee is invisible to consumers but is included in the merchant service charge that merchants pay to process card transactions. In Europe today, interchange is regulated by the EU’s 2015 Interchange Fee Regulation, which caps consumer card MIFs at approximately 0.2% for debit and 0.3% for credit cards.
These caps were intended to lower costs for merchants (and, consequently, consumers). However, issuing banks have various workarounds (such as other fees and rewards programs) that often mitigate the cost reduction.
Outside the caps, fees can be much higher. Commercial (corporate) cards and transactions where the cardholder’s bank is outside the region are not covered by the EU caps. Merchants report that fees on these card types are substantially above 0.3%. This is partly because the interchange is jointly set by Visa and Mastercard’s networks – effectively a duopoly. MIFs are not freely negotiated by acquiring banks but imposed by Visa and Mastercard on acquirers, who have no choice but to pay it.
This collective setting of fees means even competitive market pressures are weak. Retailers and trade associations have long argued that Visa/Mastercard’s market dominance lets them keep fees higher than they would be in a more open market.
On June 27, 2025, the UK’s Competition Appeal Tribunal (CAT) delivered a landmark judgment. The tribunal unanimously held that Visa’s and Mastercard’s default multilateral interchange fee (MIF) regimes infringe EU and UK competition law. The case combined dozens of claims by hundreds of UK merchants (led by firms Stephenson Harwood and Scott+Scott) who said the swipe fees were anti-competitive.
The CAT found the fees breached European competition law. In its judgment, the CAT agreed with merchants’ core argument that the set fees create a non-negotiable price floor on merchants’ service charges, which “restrict[s] competition” among banks under Article 101 of the EU Treaty. Because all acquirers must pay at least these minimum fees to issuers, banks cannot undercut each other on price, and merchants end up paying more.
The tribunal’s decision builds on earlier UK and EU rulings (e.g., the 2020 Sainsbury’s case) but extends them. The CAT found that commercial-card MIFs and inter-regional MIFs (previously unregulated by the EU cap) are also unlawful.
Scott+Scott noted this was the first time Visa/Mastercard’s commercial and cross-border fees had been found to infringe competition law.
Even though consumer debit/credit fees were capped, the tribunal held that the capped fee rules retained an “object” of unlawfulness, and the uncapped categories similarly violated the law. Merchants’ lawyers hailed the outcome. David Scott of Scott+Scott (representing one group of claimants) called it “a significant win for all merchants who have been paying excessive interchange fees.”
The finding confirms that UK/Irish merchants may now claim that Visa/Mastercard have long forced them to pay “excessive” fees under an anticompetitive scheme. The ruling itself was the result of a lengthy liability trial held in early 2024. A separate trial will follow to quantify damages, including determining the extent to which the illegal cost was passed on to consumers.
Visa and Mastercard immediately vowed to appeal. In public statements, Visa said it “strongly disagrees” with the tribunal and will seek permission to challenge the judgment. It argued that interchange fees are “critical” to a secure payment system benefiting consumers, banks, and retailers alike. Mastercard was similarly critical, calling the decision “deeply flawed” and confirming that it would be applied to higher courts.
Industry analysts note that Visa/MC can request permission for an appeal from the CAT, then likely proceed to the UK Court of Appeal and possibly the Supreme Court; this could take 1 to 2 years to resolve.
Merchants and consumer advocates, on the other hand, celebrated the result. They view it as legal validation that the fees were unlawfully inflated. The legal team described the ruling as a “major victory” against “unfairly high interchange fees” that have long burdened businesses.
Industry experts also note that without interchange revenue, card issuers would have to either cut rewards or tighten credit standards. Banks view interchange as a means of funding consumer benefits, while merchants perceive it as an unnecessary surcharge.
Importantly, even as appeals loom, this ruling sets a firm precedent for private litigation. Many merchant cases had been put on hold pending this outcome. Now they can move forward, either pressing Visa/MC to settle or proceeding to damages hearings. In any event, the decision reinforces regulators’ scrutiny: UK and EU authorities have been increasingly critical of card fees (UK’s Payment Systems Regulator estimated Visa/MC debit+credit costs add £170 m/yr to businesses), and this judgment may strengthen calls for further cuts or transparency.
For UK merchants, the practical implications are profound. With liability established, retailers could seek substantial damages. Legal experts note that if compensation is awarded for the excess interchange paid over many years, the total could be in the billions of pounds. In a 2020 statement (on a related case), a Sainsbury’s lawyer noted retailers “could potentially receive billions” back; similar calculations will now apply to this broader class action.
A key next step is the pass-on trial: the tribunal will assess how much of the overcharged fees were passed through into retail prices vs borne by merchants. This calculation will determine the total damages owed. Merchants generally claim that much of the cost was passed to consumers, which, if proven, could maximize recoveries. (A companion Scott+Scott press release confirms the pass-on judgment is expected later in 2025.)
Beyond litigation, the ruling alters negotiating dynamics. Visa and Mastercard may face pressure to lower interchange rates or to settle claims before damages are assessed. Even in Europe, corporate-card MIFs have been a sore point — in fact, trade groups have asked the EU to revisit the Interchange Fee Regulation to cap or limit these uncapped fees.
If appeals fail, the networks might proactively cut commercial and cross-border fees (or absorb them differently) to mitigate liability. Merchants may leverage the decision to negotiate lower acceptance fees with their banks. Additionally, card schemes could reconsider surcharges or scheme fees that have increased; merchants are already challenging these in separate litigation, and regulators have flagged them as an issue.
Consumers stand to gain indirectly. If merchants’ card costs decline, retailers might eventually lower prices (though empirical evidence on pass-through is mixed). The tribunal itself will quantify any effect on consumer pricing by examining the pass-through and in any case, making interchange fees illegal highlights that these costs have influenced consumer prices.
On the other hand, reduced interchange income for issuers could lead banks to cut back on reward programs or introduce fees to cover the shortfall. It might force issuers to raise prices and/or raise underwriting standards, which could dampen consumer spending power. Some consumers may pay slightly lower prices, but others could see fewer credit card perks. The CAT’s review of pass-through will shed light on how much consumers have already paid through prices, and how much was absorbed by retailers.
Overall, consumers are watching to see if any cost savings materialize. For now, the ruling sends a message that card network fees are subject to competition law – a change that could eventually translate into more transparent pricing. However, banks have argued that interchange helps fund fraud protection and reliability (improving consumer experience). Whether those arguments carry weight in future policy is an open question.
It’s essential to consider this decision within a broader global context. The ruling applies under EU/UK competition law. In Europe, the 2015 cap already limited retail-card MIFs to 0.3% or 0.2%. By contrast, U.S. interchange fees are much higher and largely unregulated. In the US, the average credit-card interchange fee is approximately 2% of the transaction amount. Only debit-card fees have a federal cap (the Durbin Amendment limits them to about $0.21 + 0.05% of a transaction).
This UK ruling does not alter US law, but US merchants have waged similar battles. A massive (albeit controversial) $30 billion settlement was reached to limit future US fees, and lawmakers have proposed breaking the Visa/Mastercard duopoly in domestic markets.
Other countries also regulate interchange. Australia, for instance, caps its domestic credit-card interchange at 0.8% (and debit at 0.2%). New Zealand and Brazil also impose caps. The UK decision, while local, contributes to the global scrutiny of swipe fees. EU officials have an ongoing antitrust investigation into Visa/Mastercard fees and merchant complaints.
Now that a UK court has ruled that multilateral fees are illegal, it may encourage EU or other regulators to look beyond capped consumer fees to the currently exempt categories.
The legal battle is far from over. Visa and Mastercard will first apply for permission from the CAT to appeal the liability finding. If granted, they could appeal the case to the Court of Appeal and potentially to the Supreme Court. Such appeals typically take 1 to 2 years. If the higher courts uphold the ruling, the networks will likely be liable for damages to merchants.
Some industry observers expect that, as the possibility of large payouts looms, Visa/MC might offer to cut specific fees or strike settlements. (In fact, the companies often settle big merchant claims – the US deal in 2023 is one example.)
Meanwhile, the tribunal will continue with additional trials. The second trial on damages/pass-on is expected later in 2025. If the appeal is delayed, the CAT might proceed on remedies in parallel. Merchants will be eager to complete all trials quickly to start recovering their losses. Furthermore, the litigation isn’t limited to interchange: merchants have also sued over rising “scheme fees” (another component of the cost of acceptance) in separate proceedings, indicating future legal skirmishes ahead.
This ruling is being hailed as a landmark win for merchants after more than a decade of litigation. For years, retailers have accused Visa and Mastercard of forcing them to pay excessive “swipe fees” under a collective scheme. Today’s tribunal decision validates those claims, finding that the default interchange fees violated competition law. It signals that even regulated card fees are not immune from antitrust scrutiny and that the long-standing duopoly’s fee model has legal vulnerability.
In practical terms, the decision opens the door to substantial damage awards and could lead to lower fees over time – potentially reshaping the cost structure of card payments. Whether these changes benefit consumers, issuers, or merchants more remains to be seen. What is clear, however, is that the status quo of jointly set interchange fees has been fundamentally challenged, and retailers can claim a hard-fought victory in this chapter of their battle.
The UK Competition Appeal Tribunal ruled that Visa’s and Mastercard’s interchange fees violated competition law. It found that by jointly setting default rates, both networks inflated the costs of merchants. The decision supports merchants’ claims that the fees were anti-competitive, though both companies plan to appeal.
The tribunal stated that Visa and Mastercard established a minimum fee that all banks were required to charge merchants, thereby eliminating competition. Since merchants couldn’t negotiate lower rates, the fees stayed uniformly high. This setup acted like price-fixing and breached competition law.
Possibly, yes. If upheld, Visa and Mastercard may be required to lower fees on commercial and cross-border transactions in the UK and the EU. Merchants could also receive compensation for past overcharges, giving them more leverage to push for lower future rates.
Consumers might see slightly lower prices if merchants pass on savings from reduced fees. However, card rewards could shrink since banks fund them through interchange income. Overall, any impact will be gradual and modest but may improve fairness and competition in the system.
Both companies plan to appeal, but if the ruling stands, they could be liable for hundreds of millions of dollars in damages to merchants. The next phase will determine compensation amounts. They may also face pressure to change fee structures to prevent future legal challenges.
