A new £5 billion legal assault on Visa and Mastercard could sweep one million UK businesses into collective proceedings without their consent, raising fresh concerns about the commercial interests behind Britain’s booming class action industry.

Law firms Harcus Parker and Hausfeld have filed claims at the Competition Appeal Tribunal (CAT), alleging that Visa and Mastercard charged businesses excessive interchange fees on card transactions dating back to October 2020.

According to The Guardian, the proposed proceedings could become among the largest competition compensation claims in British history.

The litigation is backed by commercial funder Bench Walk Advisors and led by businessman Stephen Allen, who has pursued similar actions against the payment networks since 2021.

But behind the multibillion-pound headline lies a familiar question: who stands to gain most from another enormous, commercially funded lawsuit?

One million businesses, automatically enrolled

Under the proposed opt-out arrangements, an estimated one million UK businesses, organisations and charities with annual revenues below £100 million could be included automatically unless they choose to withdraw.

Larger businesses would need to opt in.

This mechanism allows litigation to proceed on an extraordinary scale without requiring every affected business to actively authorise the claim.

It also creates substantial opportunities for litigation funders and specialist law firms, whose business models depend on financing and managing high-value disputes.

The £5 billion figure is an estimate of potential compensation, not an award or a finding of wrongdoing. Yet such headline sums help illustrate the enormous financial stakes behind the expansion of collective litigation.

Litigation as an investment opportunity

Bench Walk Advisors is a specialist commercial litigation funder that finances legal disputes in anticipation of financial returns.

Its involvement illustrates the growing influence of private capital in Britain’s collective actions regime.

Litigation funding can provide access to justice where claimants cannot afford proceedings themselves. But it also raises questions about the distribution of proceeds, the influence of funders and whether commercial returns are proportionate to the compensation ultimately received by claimants.

The proposed Visa and Mastercard claims are particularly significant because of their scale and overlap with existing litigation.

Earlier this month, a separate £700 million collective claim was filed against the same companies on behalf of approximately 126,000 UK businesses over allegedly excessive cross-border card fees.

The growing number of proceedings creates additional complexity and reinforces the need for scrutiny of duplicated costs, funding arrangements and the benefits ultimately delivered to businesses.

A legal industry in search of its next billion-pound claim?

Visa and Mastercard dispute the allegations.

Mastercard has described the new proceedings as speculative and criticised the growth of opportunistic, funder-backed litigation. Visa maintains that interchange fees support a secure and efficient payments system.

These are not, however, allegations arising in a legal vacuum. Previous court proceedings have established competition-law issues involving certain interchange fees. The new claims must nevertheless establish their own scope, liability and any compensation due.

The concern is whether collective litigation is becoming the default commercial response to complex market disputes, rather than one carefully targeted mechanism for redress.

The government’s review of the opt-out collective actions regime makes that question increasingly relevant.

Who gets the compensation?

For the businesses supposedly represented, the decisive issue is not the headline value of the lawsuit but how much money they might eventually receive, after legal expenses, funding returns and other approved deductions.

The proceedings could take years to conclude, and there is no guarantee of compensation.

That uncertainty should be central to the debate over the growth of third-party litigation funding.

Businesses with legitimate grievances deserve effective remedies. But they also deserve transparency about who is financing claims in their names, what those investors expect to earn and how any settlement would be distributed.

Britain risks building a class action industry in which the size of the lawsuit attracts more attention than the interests of the claimants.

The proposed £5 billion Visa and Mastercard litigation offers another test of whether the system serves businesses seeking redress or the commercial interests of those financing and running the claims.