3rd party uk shop card processing

[Peter Gradwell]

Hello

I'm sure we've all noticed that most of the major high street stores
are these days processing their card payments through a third party
subsiduary.

On all my receipts it says "your card payment will be processed by
$megacorp card processing limited who will retain 2.5% of the balance
and will pass the remainder to $megacorp plc".

Does anyone know why they do this? Is it now sufficiently cheap for
them to become members of VISAnet directly and process their own
payments?

If so, why do they run them through a subsiduary? Is it a good "tax
efficient" thing to do?

cheers
peter

 

[Tim]

On all my receipts it says "your card payment will be processed by
$megacorp card processing limited who will retain 2.5% of the balance
and will pass the remainder to $megacorp plc".

Does anyone know why they do this?

It's because (they think) they can reduce their VAT liability this way - but
HMC&E do not agree! (and so far the courts appear to be siding with HMC&E
this time).