Visa and Mastercard: Swiss Merchants Seek Reimbursement
In a significant move that could reshape the payment industry landscape, more than 35 Swiss companies, including Coop, TUI Suisse, Dertour Suisse, and several airlines, have collectively sued Visa and Mastercard at the Commercial Court of the Canton of Zurich. The lawsuit seeks the return of approximately 142 million Swiss francs, as the plaintiffs argue that the high interchange fees charged by these payment processors are excessive and unfairly increase their costs.
The Swiss lawsuit is part of a broader trend where merchants across Europe are challenging the high fees charged by Visa and Mastercard. If successful, the outcome could lead to lower fees for Swiss merchants, potentially benefiting consumers by reducing prices.
The issue of interchange fees has been a contentious topic for years, with the Swiss Competition Commission (ComCo) setting interim interchange fee limits for Visa and Mastercard twenty years ago. However, these limits expired in 2022, and negotiations to establish new fee regulations are ongoing.
In the EU, the debate over interchange fees has been intensifying. In 2019, Mastercard faced a significant antitrust fine of €570.6 million for obstructing merchants' access to cross-border card payment services. More recently, the Competition Appeal Tribunal in the UK ruled that Visa and Mastercard's multilateral interchange fees breach European competition law.
The ruling in the UK marks a major victory for merchants who have long argued that these fees are unfair and anti-competitive. It suggests that regulators and courts are increasingly inclined to limit these fees to promote fair competition and protect consumer interests.
Visa and Mastercard argue that interchange fees are necessary for payment innovations and to protect customers from fraud. However, the plaintiffs argue that these fees do not cover real costs or specific services provided by banks, and that they violate antitrust laws.
Visa has stated that they consider the lawsuit to be unfounded and will defend against it. Mastercard, on the other hand, has not yet commented on the allegations as no lawsuit has been served.
The dispute over interchange fees has cross-border implications, as it affects how merchants and consumers interact with payment systems across Europe. Lower interchange fees could lead to increased competition among banks and payment processors, potentially benefiting consumers through lower transaction costs.
The legal challenges and regulatory actions against Visa and Mastercard reflect a broader regulatory environment that is increasingly focused on ensuring fair competition in the financial sector. This trend is likely to continue, with ongoing scrutiny of interchange fees and other practices that may restrict competition or harm consumers.
The outcome of the Swiss lawsuit could serve as a preview of similar conflicts in the EU. As regulators and courts continue to scrutinise interchange fees, the payment industry may undergo significant changes, with potential benefits for consumers and merchants alike.
The Swiss lawsuit, driven by merchants' increasing challenge against high fees, could pave the way for reduced fees in Switzerland, benefiting both consumers and businesses. In the European Union, the debate on interchange fees continues, with recent ruling against Visa and Mastercard's multilateral interchange fees, suggesting a growing trend to limit such fees for the promotion of fair competition and consumer protection.
