April 24, 2018
Battles between merchants and the credit card networks that set interchange rates may enter periods of cease-fire, but occasional flare-ups are common and they are always in danger of turning into all-out shooting wars. The most recent skirmish to receive public attention is happening in the U.K. After five years of sometimes contradictory court rulings, a suit brought against Visa Europe by a group of supermarkets including Sainsbury’s, Asda and Walmart has reached a London appeals court.
Merchants feel the Multilateral Interchange Fees set by Visa Europe and charged by its issuing banks in the U.K. for cross-border transactions are anticompetitive, despite the ruling of a judge last November that they are not. That decision was at odds with a previous similar lawsuit against Mastercard. The appeal now under consideration will try to rationalize a final ruling in both suits.
Interchange fees make up a significant percentage of the overall fees banks and processors charge merchants to accept credit cards.