A £700m claim is what regulatory delay looks like when it is finally priced
The Payment Systems Regulator found that Visa and Mastercard face no competitive constraint when setting UK-EEA interchange fees, proposed a cap, and has not imposed it. The courts are now doing the work instead.
When a shop takes a card payment, the shop's bank pays a fee to the cardholder's bank. Visa and Mastercard set that fee. European rules used to cap it; after Brexit the cap stopped applying to UK sales to European customers, and the fees rose sharply. The UK's payments regulator found the networks faced no real competition when setting them, proposed a cap, and has not yet brought it in. A group of UK businesses is now suing instead.
The regulator already found these fees are set without competitive constraint and proposed a cap it has not imposed. A £700m court claim is the expensive, slow, leaky substitute for the cheap remedy that was never switched on.
The expertise has changed sides
The person suing Visa and Mastercard used to run antitrust at the Competition and Markets Authority. Ann Pope, a former senior director there, has filed a collective claim at the Competition Appeal Tribunal through her own proceedings vehicle, alleging that the two card networks used the end of the Brexit transition period to levy unlawful fees on UK businesses taking online payments from European customers. The proposed class covers roughly 126,000 businesses, on an opt-out basis, stretching back to October 2020.
That detail — a former competition regulator building the claim — is worth sitting with before the legal arguments. The analytical capability that would once have produced a remedy is now producing a lawsuit, because a lawsuit is the thing that moves.
The hard part is already done
Interchange is the fee a merchant’s bank pays the cardholder’s bank on each transaction, set by the network rather than negotiated. European rules capped it. When those caps stopped applying to UK-EEA transactions, the Payment Systems Regulator found that Visa raised its online rate five-fold in October 2021 — from 0.2 per cent to 1.15 per cent on consumer debit, and 0.3 to 1.5 on consumer credit — with Mastercard matching in April 2022.
The regulator did not stop at describing the increase. It concluded that the networks faced no effective competitive constraint on the acquiring side when setting these fees. That is the finding that matters, and it is the hard one: it requires defining the market, identifying who could discipline the price, and establishing that nobody can. Merchants cannot refuse Visa and Mastercard acceptance and keep selling online. Acquirers pass the fee through. There is no rival the merchant can route to.
Once a public body has said that, the question of whether a cap is justified in principle has been answered. What remains is the level. And yet the proposed cap, in the words of the claim, remains under active consideration and has not been implemented — four years after the first increase took effect.
A cap is cheap; a claim is expensive
Compare the two remedies honestly. A cap is an instrument, a commencement date and a supervisory burden. It applies to every affected merchant automatically, including the ones who have never heard of the Competition Appeal Tribunal, and it stops the harm rather than metering it.
A collective claim is the opposite on every axis. It takes years to certify and longer to try. It generates two full sets of economic evidence, both of which are deadweight. It is funded, which means a share of any award goes to the funder before it reaches a merchant. It pays only those who traded in the window pleaded, and it does nothing about the fee charged tomorrow. If the networks win, the price simply stands.
There is also a signalling problem. Visa and Mastercard are entitled to defend themselves, and no allegation in this claim has been tested. But the sequence visible to any network operator is instructive: a regulator finds your pricing unconstrained, proposes a cap, and then does not impose it. The implied rule is that a price survives until a litigation funder decides it is worth attacking.
The case for waiting
The strongest defence of the regulator’s caution is that interchange is not a simple rent. It funds issuer economics, fraud liability and acceptance, and a cap set at the wrong level in a cross-border corridor is sticky — it will shape behaviour for a decade and is politically difficult to unwind. Card networks litigate aggressively, so any cap must survive judicial review, which means the evidence base has to be unimpeachable. Better slow and durable than fast and quashed.
There is also a respectable argument that the Tribunal is the right forum anyway, since it has already found inter-regional interchange arrangements to restrict competition in a separate case. Judicial findings bind in a way that regulatory determinations do not.
Both points are real, and neither justifies where things now stand. Proportionality is an argument about the level of a cap, not about whether to have one; an interim cap, set conservatively and reviewed, answers it. And the prospect of being litigated by well-resourced opponents is an argument for acting, not for waiting — a regulator that only moves when certain of winning will never move against the two firms most able to fight.
Who is paying for the gap
Merchants, and then their customers. Inter-regional interchange is a cost of selling online to Europe; it sits in the price or in the margin. Meanwhile the UK is holding an earnest conversation about who should control payment initiation and how to build resilient alternatives to the card networks. The honest answer from this episode is that control belongs to whoever can reset a price without constraint and then wait out the response.
The Payment Systems Regulator should publish, within three months, either a final decision implementing its proposed cap on UK-EEA inter-regional interchange with a commencement date, or a reasoned statement explaining what in its own evidence changed between finding no competitive constraint and declining to remedy it.
The Treasury Select Committee should ask for that timetable directly, and ask who is now accountable for the remedy while the proposal sits open. A regulator that publishes a finding and no instrument has not protected anyone; it has written the first chapter of somebody else's claim form.
What would change this view
I am wrong if the Payment Systems Regulator publishes a final policy statement on inter-regional interchange fees with a specified commencement date within the next six months, and the cap takes effect on that date. That would show the delay was the normal lag of a contested intervention rather than a decision not to decide, and that the Tribunal claim is a parallel track rather than a substitute for regulation.
I would also be wrong, in a different way, if the Tribunal refuses certification of the class or the claim settles at a figure that, after funding and costs, returns a meaningful share to the 126,000 businesses within a few years. If private enforcement turns out to be fast and efficient here, the argument that it is a poor substitute for a cap weakens considerably.
Worked from
- UK Businesses File £700m CAT Claim over Visa and Mastercard EEA Fees
The Fintech Times · 2026-10-17