Beyond the Transaction: Every Transaction Has a Story

Clarifying recent press release claims

By Tim Murphy and Mark Barnett

We want to take a moment to respond and reflect on the recent press release issued by a U.S.-based law firm concerning a proposed UK consumer class action lawsuit.

While a lawsuit has not yet been filed, we firmly disagree with the claims as outlined in their press release.  First, the European Commission decision they highlight in their press release applied to interchange fees related to transactions that cross borders within the EU. That decision did not touch on domestic UK interchange fees; those were set on very specific market conditions. Attempting to equate those two is like comparing apples to oranges.

Second, these types of cases have been unsuccessful in the past. In the United States, class action lawyers have attempted to bring almost identical claims for damages supposedly suffered by consumers due to interchange.  Virtually all of those cases were thrown out as the courts found the theory that interchange harmed consumers was too speculative and remote to proceed.

This is not surprising because consumers derive enormous benefits from our payments technology in the UK and across the globe.

Our business is to power the way people pay every day – in store, online and everywhere.  To do this, we’re constantly innovating and deploying the best technology that keeps payments safe and secure, while making the experience as convenient as possible.

The UK is one of the most developed and innovative payments markets in the world, providing many options for people to pay. Our cardholders benefit from some of the richest rewards programmes, seeing real added value beyond the purchase. And, technology like contactless payments and our work with transport networks are driving easier payments in everyday travel. Merchants also receive enormous benefits from our technology, including greater security and the most significant benefit of all – increased sales. This is why millions of merchants around the world choose to accept payments using MasterCard technology.

Of course, there are costs to making a payment. In our system, the costs of making a payment are shared by all of those who benefit from the payment – the consumer, the card issuer, the retailer and the acquirer (what the industry calls the retailer’s or merchant’s bank) – all pay a small portion of the cost.  By sharing the costs among ALL of those who benefit from the transaction, consumers and merchants obtain the full value of our technology at costs that are much lower than they could achieve if they paid the costs on their own.

It is unfortunate to see the U.S. class action system being replicated in the UK.  All too often in class action cases, the only winners are the lawyers.  If past experience is any indication, even the lawyers will be losers in this one.

Tim Murphy is general counsel and chief franchise officer of MasterCard. Mark Barnett is Division President, United Kingdom and Ireland for MasterCard.