CHARGIN’ INTO CREDIT CONFLICT

Only 15% of small biz in survey rule out customer card fee.

Canadians may see a jump in businesses adding credit card surcharges as restrictions on the practice lifted last week, though research from the Bank of Canada shows consumers have long been paying extra because of the payment option.

A report last Wednesday from the Canadian Federation of Independent Business found 19% of small businesses are considering an added charge for credit card transactions to offset processing fees, while 26% of respondents said they will add a surcharge if their competitors or suppliers do.

“These data reveal the frustration so many business owners feel about the high cost of credit card processing which can eat about 1.5-2.5% of every sale,” CFIB president Dan Kelly said in a statement.

Businesses that often sell to other businesses are most likely to surcharge for credit card use, the survey found, while businesses that serve consumers were less likely to consider it out of fear of losing business. The survey found 40% of small businesses say they are not sure yet, and 15% do not intend to add an additional charge.

The report came ahead of new rules set to take effect last Thursday that will give businesses the power to add a surcharge on credit card transactions.

The change came about as part of a class action settlement over the credit card processing fees, known as interchange fees, charged to retailers, and the rules around them that are set by banks and credit card companies.

The settlement included $188 million in payouts from banks and credit cards, as well as a removal of the surcharge restriction from Visa and MasterCard.

Merchants who want to add a fee for credit cards have to display signage that they have a surcharge, as well as have the fee explicitly shown on the receipt. The new surcharge option will not be available in Quebec due to consumer protection laws in the province.

Telus Corp. has already said it wants to add 1.5% processing fee to customers who use a credit card. The company said in August it expects the average monthly cost to be about $2 per customer, while the fee can be avoided by selecting other payment options such as debit or one time bank payments.

While the new rules allow businesses to pass on the fees, they don’t actually reduce them, something the Liberal government committed to do in the last two budgets but so far is still working through consultations.

Small and medium businesses have also been fighting to get the same interchange rates charged to big businesses.

MBE is highly active in creating social awareness through social media with regards to social distancing measures and how necessary they have been in the current pandemic. Our goal is to act as a catalyst in helping the Government through tough times and enable them to bounce back from problematic scenarios.