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240,000 UK businesses call to end payments giants '£5bn stealth tax'

A consortium of businesses and trade bodies has asked parliament to review the card payment fees levied by firms such as Visa and Mastercard.

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Dom Hallas, executive director, Coadec

A collection of UK business leaders has called on the government to axe the alleged “£5bn stealth tax” levied by card payments giants, claiming it is "crippling" British firms.

The Axe the Card Tax campaign includes 240,000 British businesses as well as the British Retail Consortium, the Federation of Small Businesses, the Retail Charity Association, the British Independent Retailers Association, and the Association of Convenience Stores.

The major card schemes, such as those provided by Visa and Mastercard, charge a percentage of every transaction, and these fees have increased by 600% since 2015.

The campaign highlighted how major card schemes have also imposed an additional charge for UK companies accepting cards from the EU since Brexit.

Axe the Card Tax is calling for action on this price rise, which it says will cost businesses an additional £36.5m a year, citing figures from the British Retail Consortium.

In addition, the campaign highlighted UK fintechs that are providing “much needed” alternatives in the payments market, such as GoCardless,Crezco, and Tomato Pay, but went on to allege the major card scheme’s “stranglehold” over the market is making it impossible for “these new firms to thrive”.

Martin McTague, National Chair of the Federation of Small Businesses, said that these fees “are often confusing and lacking in transparency” which he said increases costs for both consumers and businesses. 

Dom Hallas, executive director at non-profit policy voice for start-ups Coadec, said removing the card tax will help to create "new British fintech champions" and "unleash the innovative growth companies", adding that we need a government "brave enough" to take a stand on the issue.

The issue of the card payment fees charged by card providers is already attracting formal regulatory investigation.

In June 2022, the UK payments regulator announced it is set to launch two separate market reviews of the fees charged by Visa and Mastercard.

The Payment Systems Regulator will assess the scheme and processing fees charged by the card issuers and will separately examine cross-border interchange fees.

In an interview with AltFi, Mark Barnett, Mastercard’s Europe President, speaking on the topic of card fees said: “If you look at the cost of acceptance, the cost that's attributable to us, it's a tiny fraction. 

He added: “So it's already extremely good value for money".

The executive went on to draw attention to the "value adds" it provides by “wrapping services around the payment”, including “marketing and analytics and loyalty” and “cyber and intelligence and fraud prevention”. 

He added: “That's really the value add, the payment is a pretty simple thing.”

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