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The defining UK payments litigation is the long-running Mastercard/Visa interchange-fee saga before the Competition Appeal Tribunal (CAT). On 27 June 2025 the CAT held in Trial 1 of the Umbrella Interchange Proceedings (c.2,100 merchant claimants) that default multilateral interchange fees infringe competition law 'by object'. In early 2026 the CAT found acquirers passed 100% (Interchange Plus) / 85% (blended) of fees to merchants, and that merchants generally did not pass costs to consumers (except cash services, insurance underwriting and travel agents) — clearing the path to damages. The £14bn Merricks v Mastercard class claim settled for £200m (approved Feb 2025).
The pass-on stage cleared a further hurdle. In early 2026 the CAT determined acquiring banks passed on 100% of interchange to merchants on Interchange Plus contracts and 85% on blended arrangements, and that merchants did not generally pass costs to consumers except in cash services, insurance underwriting and travel agents/online intermediaries — clearing a hurdle to substantial damages. These pass-on findings materially increase scheme liability exposure.
In the collective-proceedings track, the Merricks v Mastercard claim, initially valued at £14bn, reached an in-principle £200m settlement in December 2024 which the CAT approved after a February 2025 hearing; it concerned EEA MIFs' causative influence on UK interchange passed to consumers. The settlement, at a small fraction of the headline value, sets a precedent for collective-proceedings settlement of interchange consumer claims.
Outlook
W7 is escalating. The combination of the [2025] CAT 37 liability finding and the early-2026 pass-on findings, read alongside the January 2026 High Court ruling upholding PSR cap powers (W4), together materially escalate scheme liability and regulatory exposure on UK card economics. The pending appeal of the liability ruling and the remaining quantum and exemptions trials are the principal forward variables, with the direction of travel pointing toward substantial merchant damages.
Legal & Litigation
The most significant UK payments-sector legislative development in progress is the Financial Services and Markets Bill [HL], introduced in the House of Lords on 19 May 2026 and having completed its Lords third reading on 15 September 2026. The Bill now proceeds through the House of Commons as Bill 152. As drafted, the Bill would abolish the Payment Systems Regulator as a standalone body and transfer its regulatory functions to the FCA. This includes the existing APP-fraud reimbursement requirement framework, which would move across to the FCA via transitional provisions rather than lapsing or being re-legislated from scratch. The Bill has not yet received Royal Assent and remains subject to further Commons scrutiny and amendment; its abolition of the PSR is not yet a legal fact.
This is a structural institutional-architecture change rather than a substantive conduct-rule change in the first instance: the underlying APP-fraud reimbursement obligation is intended to be preserved through the transition, but the regulatory body responsible for supervising and enforcing it would change from the PSR to the FCA. For firms and legal teams tracking payments regulatory accountability lines, this means the identity of the relevant regulator for payment systems matters is itself in transition, which has practical implications for where complaints, supervisory correspondence, and enforcement referrals should be directed once the transfer takes effect, assuming the Bill passes in its current form.
The Bill's progress — Lords introduction in May, Lords third reading in September, now Commons scrutiny — indicates a reasonably advanced stage of the legislative process, though Commons consideration, potential amendment, and the subsequent need for both Houses to agree final text before Royal Assent mean the precise timing of enactment and of the PSR's actual abolition remains undetermined as at this cycle.
Outlook
The Bill's passage through the Commons as Bill 152 is the development to track most closely; any amendments made at Commons stage, particularly around the transitional provisions preserving the APP-fraud reimbursement framework, would be material to how smoothly the PSR-to-FCA functional transfer occurs in practice. Until Royal Assent is obtained, the PSR continues to exist and function as the current regulator for payment systems matters, and firms should continue to treat it as the live regulatory body for the time being.
1 earlier distinct update(s)
Legal & Litigation
The Administrative Court's ruling in [2026] EWHC 64 (Admin) addressed the Payment Systems Regulator's section 54 FSBRA 2013 power to cap cross-border interchange fees, a power exercised under the PSR's current statutory footing. This ruling sits alongside the Competition Appeal Tribunal's Trial 2 pass-on findings in [2026] CAT 11, and both bear directly on the enforcement architecture that will govern scheme access and settlement questions once the PSR's functions are absorbed into the FCA under the Financial Services and Markets Bill 2026-27. The interchange-fee cap power itself derives from the FSBRA 2013 designation regime, which is being retained through the institutional transition, meaning the substantive legal question at issue in this litigation will remain live and relevant regardless of which authority ultimately administers it.
This body of litigation is significant less for its immediate outcome and more for what it establishes about the scope of section 54 powers at a moment when the identity of the body that will wield those powers is itself in transition. A ruling narrowing or affirming the section 54 cross-border interchange-fee cap power will shape how the FCA approaches equivalent enforcement questions once it absorbs the PSR's remit.
Outlook
Watch for how the FCA signals its intended approach to interchange-fee and pass-on questions as it prepares to absorb PSR enforcement functions, and for any further appellate development in either the EWHC or CAT proceedings before the institutional transfer completes.
1 earlier update recorded under a different module label
An early cycle filed this entry under this module code with a heading naming another subject. Kept for the record; not this module's latest position.
Central Bank Digital Currencies
No new structured findings were developed for this module in the current cycle. The Bank of England's systemic-stablecoin work is addressed in W2; the CBDC module covers the digital pound programme separately. No in-cycle movement on the digital pound was surfaced in the research set.
Outlook
No date-certain forward items are currently recorded for this module. Standing-brief coverage will resume when new signal is available.
Sources and findings (4)
- T1CAT — Merchant Interchange Fee Umbrella Proceedings judgment — On 27 June 2025 the CAT handed down judgment in Trial 1 of the Umbrella Interchange Proceedings ([2025] CAT 37), finding for the first time that unregulated multilateral interchange fees constitute a 'by object' infringement of competition law, holding Mastercard and Visa liable for breach of statutory duty.
- T3ICLG — Merchants set for damages as CAT rejects consumer pass-on — In early 2026 the CAT determined acquiring banks passed on 100% of interchange to merchants on Interchange Plus contracts and 85% on blended arrangements, and that merchants did not generally pass costs to consumers except in cash services, insurance underwriting and travel agents/online intermediaries — clearing a hurdle to substantial damages.
- T3Slaughter and May — Merricks v Mastercard settlement approval — The Merricks v Mastercard collective claim, initially valued at £14bn, reached an in-principle £200m settlement in December 2024 which the CAT approved after a February 2025 hearing; it concerned EEA MIFs' causative influence on UK interchange passed to consumers.
- T3Global Legal Post / Hogan Lovells Q3 2025 update — The proceedings are structured as three trials: liability (decided June 2025), pass-on/causation/quantum, and exemptions under European law; the claimant cohort declined from c.2,100 as merchants settled. Visa and Mastercard sought permission to appeal the liability ruling.