Tesco receives £39m settlement from MasterCard over credit card fees

More than 20 UK retailers are suing MasterCard over the “historic overpayment of anti-competitive interchange fees”, according to Bloomberg.

Tesco is the largest claimant in the litigation and the settlement was revealed by MasterCard chief financial officer Martina Hund-Mejean during the credit card company’s results.

A MasterCard spokesman said: “Legal proceedings with Tesco have been settled on mutually acceptable terms. It will avoid the cost and distraction of litigation and the uncertainties that are inherent in such cases.

“MasterCard now looks forward to working with Tesco as a key partner in the UK to further encourage the use of convenient, safe and secure electronic payments in its stores”.

Credit card fees have long been a bone of contention for British retailers and the British Retail Consortium (BRC) has campaigned against “unjustifiably high fees” for a decade.

The BRC estimates the fees cost UK businesses more than £1bn a year.

In March the EU passed a law capping the cost of processing debit and credit card fees. Under the new rules, fees are capped at 0.2% for debit and 0.3% for credit transactions.

Earlier this month the EU sent MasterCard a formal complaint, which may result in fines for fess being too high.

The EU is objecting over practices including “excessive” fees when foreign visitors pay using cards in EU countries.