The Fed has joined a call to urge the government to take action to curb soaring credit card fees as figures show a rise of 600% in almost 10 years.

The organisation has joined a coalition of more than 240,000 businesses who have come together to launch the Axe the Card Tax campaign, which highlights around £5bn is being lost every year to Visa and Mastercard fees charged on every transaction.

Figures published by the campaign show card payment scheme and processing fees have increased by 600% since 2014. Meanwhile, “interchange fees” for payments made by EU visitors to the UK have also increased by around 500%.

The campaign, supported by the British Retail Consortium, the Federation of Small Businesses and British Independent Retail Association, says almost two-thirds of retail payments are made on card networks dominated by Visa and Mastercard.

PayPoint next-day funds service goes live

Fed president Jason Birks said: “These transaction fees make the cost of accepting a payment by card ruinously expensive for many businesses – in particular after the pandemic has accelerated the trend towards cashless payments. This is why we’ve added our name to the Axe the Card Tax campaign.”

As a first step, letters have been sent by the coalition to the chair of the Treasury Select Committee, Mel Stride, and to the economic secretary to the Treasury, Andrew Griffith, asking the government and regulators not only to axe card tax, but also to look at other ways to lower retailer costs and drive innovation in the payments sector.

“The combination of card interchange fees and card scheme and processing fees represents a card tax on almost every payment made in the UK. This piles pressure on selling margins that are already razor thin. It also creates an unlevel playing field in the payments sector, meaning that alternative lower-cost payment options cannot easily compete,” the letter reads.

Card-scam gang continues to prey on convenience stores

The coalition has also called for evidence-gathering sessions to take place over the next three months with those “directly impacted by the market dominance of the major card schemes, including retailers”.

Retailers have welcomed The Fed’s support of the campaign as they continue to struggle with the cost-of-trading crisis.

Christine Hope, of Hopes of Longtown in Herefordshire, said: “We welcome anything that brings down transaction fees. I trade in a rural location, and because of costs we do not take card payments for any amount under £10. Cash is still important, but fees have risen at an alarming rate.”

Read more card payment news and advice