Accepting payments for a third party

There are a number of small businesses that I know who do not have the technical expertise to set up a system to accept online payments. There is an opportunity for me create a website which will allow their customers to send payments to, and I will then pass on the funds to the business.
The payments would be made using credit card directly into my (my company's) merchant account via my website. Let's presume that my bank / merchant account provider are happy with the arrangement. I would charge a % fee on each payment.

My question is, is this legal? If so, would I be required to charge VAT on only the fees part of the payments and be able to pass on the rest of the funds without VAT.

I understand that there are already solutions out there for this - PayPal etc, but the viability of the business model is not my question.

It sounds very messy and dangerous.

You get a payment by credit card for Z Ltd.
YOu pass on the money to them
60 days later the credit card company charges it back to you.
You ask Z ltd for the money back.
They dispute the validity of the disputed charge.

As a customer I see a charge on my visa card for Anonymous Company and I don't know what it is. So I will charge it back. This actually happens me a few times, where the name on the credit card bears no relationship to the name of the business I dealt with.

If there is a lot of messing would your CC provider pull your merchant account?

If you get a routine Revenue audit, although there is nothing wrong with it, they might well be very suspicious.

It would really have to be a very profitable business for you to consider it.

I don't know if it is a vatable service. If so, it would be on the fee element.