New Credit Card Charges Looming?
The Consumers’ Association of Canada warned Tuesday that the cost of credit cards could increase by as much as 10% at the cash, if retailers get their way.
The association says that could be the outcome of a pending ruling from Canada’s competition tribunal, which is judging a case against Visa and MasterCard that was launched in 2010.
Says the association “Merchants across Canada have been instrumental in driving consumers to use electronic payments – and in many cases offer no other alternative – and now they want consumers to pay extra to do so and/or dictate which particular Visa or MasterCard credit card is acceptable to them”.
Businesses, represented by the Canadian Retail Council of Canada and the Canadian Federation of Independent Business (CFIB) are looking for relief from the rising cost of premium credit cards. Says the CFIB “Every time you pay with a credit card at your local restaurant, drycleaner, craft store, or other independently owned business, the credit card company “pockets” as much as almost 3% of the money. The merchant may deal with this hidden cost by hiring fewer staff, reducing the holiday bonus and/or raising prices.”
The truth is somewhere in between, with some cards charging as much as 3% and others charging as little as 1.2%. Regardless, if merchants don’t like the value Amex, Visa, or Mastercard bring, they always have the choice not to use them and rely on debit and cash.
What can you expect if the Merchants get their way and are allowed to surcharge? You can say goodbye to some of the richer rewards credit cards on the market today. Issuers are using the interchange their are charging merchants to fund the credit card value propositions consumers are addicted to in Canada. This would have a material impact on the credit card rewards landscape.