In a landmark decision, a court has ruled that Mastercard’s transaction fees, which retailers paid for processing card transactions, were unlawfully high. This important ruling may open the floodgates for millions of affected consumers in the United Kingdom to receive compensation. Estimates place payouts at £70 for every person.
The fees at issue were enacted on certain transactions during a 15-year period from 1992-2008. Retailers have had no choice but to pass these growing costs onto consumers, leading to skyrocketing prices across all goods and services. Walter Merricks, the former chief ombudsman who brought a class action lawsuit over Mastercard’s multibillion-pound fees for card transactions, said these were excessive and unfair.
As a result of this ruling, the court has since settled for payout of £200 million. Interestingly, £100 million of this total is set aside exclusively for compensating affected consumers. To qualify you need to have resided in England, Wales or Northern Ireland for at least three months. This residency should have taken place between June 1997 and June 2008. For residents of Scotland, the eligibility period starts back in May 1992.
That’s just 5% of the affected 46 million shoppers who have to claim their payouts. If they are successful, every claimant could expect to be paid close to £45. However, if the applicant take-up is less than expected, payments can be limited to a prepaid travel concession of £70 per person.
Walter Merricks said that he was pleased with the court’s decision. He promised that “consumers will benefit because Mastercard’s fees paid by retailers for processing card transactions had been illegally high.” He noted the broader implications of the settlement for UK consumers, saying, “Virtually all UK consumers had lost out for long periods by paying higher prices than they should have done as retailers passed on those costs.”
That consumers only have until the end of this year—December 31, 2023—to file their claims. As Merricks emphasized, “The settlement that has today been finally approved represents a fair and just outcome for UK consumers.”