Paying by debit/credit card - 2.5% to 3rd party company

Paying by debit/credit card - 2.5% to 3rd party...

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I have noticed this a few times, but can't work out the reasoning behind it!!

When you pay by debit/credit card at supermarkets, etc, you pay 2.5% to "Supermarket" Financial Services plc - but the price is the same regardless of the method of payment. I just wondered what the reasoning was behind this!! Being completely nosey and curious!
Chris McLaren

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By User deleted
04th Sep 2007 11:45

VAT
The financial services are VAT exempt, by splitting the income they save VAT on the 2.5% .

If the supermarket takes £1bn in card sales per annum then £25m is exempted saving potentially £3.7m in tax (assuming all sales are otherwise standard rated).

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