The Axe the Card Tax campaign is urging the UK Treasury and the Payments System Regulator to assess the costs associated with card payments in order to foster innovation in fintech payments.
According to the campaign, retailers incur an average cost of 0.7% on every card payment, resulting in an estimated £5 billion annually paid as a “card tax” by British businesses.
Axe the Card Tax represents a coalition of 240,000 businesses and various trade organizations, including the Coalition for a Digital Economy (Coadec), the Federation of Small Businesses, the British Retail Consortium, the Association of Convenience Stores, the Federation of Independent Retailers, and the Charity Retail Association.
The campaign is advocating for several changes:
– A freeze on all transaction fees by the Payment Systems Regulator (PSR) until their investigations into the payment sector are completed.
– A reversal of the 400% increase in cross-border interchange fees introduced by major card schemes in early 2022, following Brexit.
– A detailed review by the UK Treasury of the costs associated with accepting card payments in the UK.
– Regulation of alternative payment providers and greater clarity on the future of open banking to give retailers more options and transparency regarding payment alternatives.
Charlie Mercer, head of economic policy at Coadec, states, “With the rise of digital technology over the last decade, one would expect a variety of payment methods to emerge. However, it is primarily card payments that have thrived. While cards are an important method of payment, they are not the only option. High card payment fees encourage banks to preserve the current system, and the adoption of payment innovations like open banking will always be challenging as long as this situation persists.”