Visa and Mastercard lose decade long legal battle

Open Banking Positioned as Scalable Alternative to Card Payments

Alex Speedie

July 1, 2025

The UK’s Competition Appeal Tribunal ruled on Thursday that multilateral interchange fees charged by Visa and Mastercard violate both UK and EU competition rules, a significant setback for the card networks in a legal dispute that has spanned over a decade.

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The unanimous decision, delivered on June 27, concluded that the default fees merchants pay when customers use Visa or Mastercard credit and debit cards restrict competition and lack objective justification. The ruling applies to both consumer and corporate card transactions and could trigger a wave of damages claims from retailers across the UK and potentially the EU.

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Multilateral interchange fees, also known as swipe fees, are set by the card networks and paid by the merchant’s bank to the cardholder’s bank on each transaction. Though not visible to customers, the cost is typically passed on to merchants and ultimately to consumers. Retailers have long argued the fees are excessive and non-negotiable.

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The ruling marks the end of the first phase of the litigation, known as Trial One, which addressed liability. Future phases will examine whether Visa and Mastercard are entitled to any exemptions and assess the financial harm to merchants, including whether retailers absorbed the fees or passed them on to customers.

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Both card networks said they intend to appeal the decision.

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The ruling adds to a growing list of legal and regulatory challenges to card fees globally. In the United States, Visa and Mastercard agreed in March to a $30 billion settlement with merchants after nearly 20 years of litigation. The settlement, still pending final court approval, would reduce and cap US credit card processing fees for five years.

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In the UK, Mastercard also faces other legal risks. In May, the company agreed to pay £200 million to settle a class action brought by consumer advocate Walter Merricks. The case, filed in 2016, alleged that Mastercard overcharged UK consumers through inflated interchange fees.

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Despite these pressures, card usage remains widespread. According to UK Finance, spending on UK issued cards topped £1 trillion in 2024, with more than 163 million cards in circulation by year end, up from 159.7 million in 2023.

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Concerns over payment infrastructure dominance are also growing in Europe. European Central Bank President Christine Lagarde said in April that most major payment systems, including Visa, Mastercard, PayPal and Alipay, are controlled by companies based in the US or China. “The whole infrastructure mechanism that allows for payments is not a European solution,” she said.

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Meanwhile, UK regulators are stepping up efforts to lower the cost of payments. The Payment Systems Regulator has encouraged the adoption of alternatives such as Account to Account (A2A) payments using Open Banking infrastructure. The UK government also launched a Smart Data Group earlier this month to explore data driven financial innovation.

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Ultimately, this decision directly supports the broader policy push toward Open Banking and Account-to-Account (A2A) payments, which allow consumers to pay directly from their bank accounts, bypassing card networks and their associated fees.

This ruling may accelerate regulatory support and funding for Open Banking infrastructure, such as improved APIs, fraud protection, and consumer consent frameworks. Also, merchants now have greater incentive to adopt Open Banking-powered payment options, which typically involve lower transaction fees and faster settlement.

The decision could trigger more investment in Open Banking startups and infrastructure providers (e.g., Tink, TrueLayer, Ozone API). It sends a clear signal that the traditional card rails may no longer be the unquestioned default, particularly for ecommerce and recurring payments.

Finally, while Open Banking has grown on the business and regulatory side, consumer adoption has been relatively slow. Legal decisions like this draw attention to the costs of card payments and may help Open Banking become part of the public conversation, especially if retailers begin promoting it as a lower-cost, preferred payment method.

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Visa and Mastercard lose decade long legal battle

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