Mastercard's Legal Woes Are Growing: U.K. Ruling Raises Red Flags

By Kaibalya Pravo Dey | June 30, 2025, 10:50 AM

Mastercard Incorporated MA has been found in violation of European competition law for imposing excessive interchange fees on transactions made using its cards. The U.K.'s Competition Appeal Tribunal ruled that these multilateral interchange fees, paid by merchants’ banks to cardholders’ banks, restricted competition and lacked objective justification, per Reuters. Visa Inc. V, a major peer, is facing similar allegations.

The ruling exposes Mastercard to significant financial liability, as U.K. retailers are now positioned to seek damages. It also sets a legal precedent that may compel Mastercard to revise its cross-border fee structure. Meanwhile, the U.K. Payment Systems Regulator, already concerned about rising card fees, may impose stricter oversight and potentially cap such fees across the industry.

While the Tribunal has ruled the fees unlawful, another trial is underway to assess whether merchants passed these costs on to consumers. Both Mastercard and Visa are expected to appeal the decision.

If U.K. merchants are awarded damages, both companies could face sizable payouts. In addition, forced reductions in cross-border interchange fees would impact a steady, high-margin revenue stream. The ruling also opens the door to further legal challenges and regulatory scrutiny in other regions, raising legal costs and potentially constraining Mastercard and Visa’s global pricing power.

Legal and competitive pressures, including the rise of fintech disruptors, may challenge the payments giants' duopoly, but their robust business models and solid profitability remain hard to overlook.

In this backdrop, merchant interest in alternatives like stablecoins is likely to grow, especially as consumer crypto wallets become more user-friendly and regulated stablecoins gain traction. Stablecoins offer broad global access, near-instant settlement, and significantly lower transaction fees. As such, companies focused on this medium, like PayPal Holdings, Inc. PYPL, could absorb a growing share of global transaction volume.

PayPal launched its stablecoin, PYUSD, in August 2023 in the United States and has already processed select payments using it. In the U.K., PayPal is registered with the Financial Conduct Authority (FCA) as a crypto provider, signaling its readiness to expand. However, actual stablecoin transactions are not yet live in the region. That said, PayPal continues to offer a robust suite of services in the U.K., including online payments, peer-to-peer transfers and a Buy Now, Pay Later option.

MA has already launched its Multi-Token Network and piloted USDC settlements to embed blockchain into its payment system.

Mastercard’s Price Performance, Valuation and Estimates

Shares of Mastercard have gained 4.5% year to date, outperforming the broader industry’s 3.2% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

From a valuation standpoint, Mastercard trades at a forward price-to-earnings ratio of 31.81X, higher than the industry average. Mastercard carries a Value Score of D.

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Mastercard’s 2025 earnings implies a 9.5% rise year over year, followed by 16.7% growth next year.

Zacks Investment Research
Image Source: Zacks Investment Research

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report


 
Mastercard Incorporated (MA): Free Stock Analysis Report
 
Visa Inc. (V): Free Stock Analysis Report
 
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Latest News