Mastercard, one of the worlds largest cards and payment solutions providers, has been accused of allegedly overcharging 46 million British consumers during a 15-year period. A £14bn damages claim on behalf of these brits has now been given the green light to proceed following a landmark ruling by the UK’s highest court.
The claim alleges that these 46 million people paid higher prices when paying for goods in shops than they should have due to higher than normal transaction fees charged by Mastercard, allegedly in breach of competition law
The Supreme Court ruling, made on 11 December 2020, has denied Mastercards appeal and means that the case will have a second hearing at the Competition Appeal Tribunal (CAT).
Mastercard has ” fundamentally disagreed” with this claim, advising that they know people have received valuable benefits from Mastercard’s payments technology.
“No UK consumers have asked for this claim. It is being driven by ‘hit and hope’ US lawyers, backed by organisations primarily focused on making money for themselves.
“Mastercard will be asking the CAT to avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed.”
The legal action was taken by the former UK financial ombudsman Walter Merricks, who started the claim on behalf of individuals over the age of 16 who were resident in the UK for at least 3 months between 1992 and 2008 who has bought an item or service from a business that accepted Mastercard payments.
His case was originally thrown out in 2017 before being revived by the Court of Appeal last year, who claimed the Competition Appeal Tribunal had applied to the wrong legal test when determining whether action could be taken. It was this decision that Mastercard were appealing against and have lost, with the Supreme Court ordering the claim to proceed.
In a statement after the ruling, Merricks said: “I am particularly pleased that the Supreme Court has recognised Parliament’s aim in providing for collective claims where companies have broken competition laws and have caused loss to consumers or small businesses.
“Enforcement of fair competition laws is vital for this country’s market economy and companies who break these laws can now expect not only to be fined by the regulator but to face much bigger bills in redress claims from those they damaged.”
While no further decisions about the case have been made, and will likely not be made for a while, if the court awards the full amount of £14bn, it would mean that 46 million people would be eligible to claim up to £300 each, regardless of whether they had ever had a Mastercard card or not.
This landmark ruling in the proceedings so far is eagerly watched by many, as the court has set a benchmark for new mass consumer legal claims, increasing the accessibility of potentially receiving damages for consumers.
Matt Cockayne, CCO of Yapily, an open banking API platform provider believes the ruling shows big card monopolies are on their way out – and this is a change for the better. Businesses are already turning to open banking and the benefits are undeniable. Not just that, these new open banking-backed services will help the economy get back on its feet in ways the big card players can’t.
“This is a clear sign that things are changing for the better,” he said. “Businesses and consumers simply cannot afford to continue paying sky-high rates when it comes to card payments.
“Open banking services are already starting to take their place. This year alone, OBIE data has shown half of UK SMEs have used open banking-backed services to see their accounts in real-time, issue paperless invoices to clients or forecast their cash flow to survive during the pandemic. The benefits are undeniable. Not only does it reduce costs for everyone involved, but businesses who are trying to get back on their feet can also access fairer, personalised loan options and take control of their business’ financial health. Something that’s essential to ensure the economy can get back on its feet in the new year.”