MasterCard Faces $25 Billion ‘Collective Action’ in U.K. over Interchange Fees As a $7 billion interchange settlement negotiated over a decade between the card networks and retailers unravels in the U.S., MasterCard could face damages of up to £19 billion ($25 billion) if a U.K. court finds consumers were affected by excessive interchange fees there from 1992 to 2008. While interchange is charged by issuing banks and paid by merchants as part of their costs to process credit and debit cards, consumers eventually pay in the form of higher retail prices. The suit is one of the first class action-like suits in the U.K. to be brought under the new Consumer Rights Act, passed by Parliament in 2015. In 2014, an EU court found that MasterCard had violated EU laws by setting interchange fees too high. The EU has since imposed interchange caps on cross-border transactions (0.2 percent for debit transactions and 0.3 percent for credit transactions).

“The prices of everything we all bought from 1992 to 2008 were higher than they should have been as a result of the unlawful conduct of MasterCard,” said Walter Merricks, the former U.K. financial services ombudsman leading the suit. “To be clear, there is no question that MasterCard acted illegally in the way it conducted its business, a business that affects all of us. All of us overpaid to the tune of up to 19 billion pounds during a period lasting 16 years. Although most of us did not know this, experts who study the retail economy knew it was happening—and so did MasterCard.”

MasterCard “firmly disagrees” with Merrick’s argument and said in a statement: “Electronic payments deliver real value to people online, in-store and everywhere. MasterCard is committed to providing ever more convenient, safe and secure payments to all our customers, including consumers, retailers, governments and banks.”