Zinger Key Points
- Mastercard agreed to settle a 200 million pounds lawsuit filed by millions of U.K. consumers
- The plaintiffs initially demanded 10 billion pounds for Mastercard's exorbitant fees on card transactions.
- Benzinga shares with you top insiders news
Mastercard Inc MA has agreed to settle a $250.35 million (200 million pounds) lawsuit filed by millions of U.K. consumers alleging that the company unfairly imposed exorbitant fees on card transactions.
The Financial Times cites familiar sources as saying the credit card company faced a lawsuit worth at least 10 billion pounds from Walter Merricks, the former head of the U.K.’s Financial Ombudsman Service, who represented 46 million consumers.
Mastercard and Visa Inc V have been long embroiled in global civil complaints for charging consumers and businesses to use their cards.
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Earlier this year, the two companies agreed to a $30 billion settlement in the U.S. over transaction costs.
Regulators in the U.K. have also sought to challenge the dominance of the two networks, which accounted for 95% of all debit and credit card payments in the country in 2023.
The U.K. watchdog had planned to reintroduce a cap on card fees for online transactions between the U.K. and EU after the charges grew more than fivefold since Brexit.
In September, the U.S. Department of Justice sued Visa for allegedly influencing the debit network market. According to the suit, Visa commanded over 60% of the U.S. debit transactions market.
As of September 30, 2024, Mastercard’s cash and cash equivalents balance stood at $11.4 billion.
Mastercard stock gained over 23% year-to-date. However, the company projected a low-double-digit CAGR for net revenue between 2025 and 2027, down from its prior high-teens forecast.
It expects mid-teens EPS growth over the next three years, reducing expectations from earlier low-20s guidance.
KeyBanc’s analyst Alex Markgraff, in his credit and debit card volume survey for the third quarter, noted that banks clocked slower growth in card spending despite continued consumer resilience. JPMorgan emphasized that customers have mostly exhausted their “cash buffer.”
Prior reports indicated Mastercard’s plans to slash 3% of its global workforce, impacting nearly 1,000 employees.
Price Action: MA stock is down 1.38% at $519 at the last check Wednesday.
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