Tammy Blanchard has worked at Don’s Tire & Automotive Repair Ltd. for 13 years. During that time, the business’s office manager has observed a clear trend when it comes to how customers pay for goods and services.
“There’s a lot more credit card use nowadays than there is cash,” she said.
“It used to be cheques and cash. Now it’s Visa and MasterCard.”
For small businesses like Don’s Tire, method of payment matters. With credit card companies charging as much as 3 1/2 per cent on transactions involving their cards, the financial bite can be painful.
Blanchard said the fees cost her employer thousands of dollars every month.
“It’s a huge issue,” she said. “The fees are ridiculous.”
Blanchard was disappointed with the Canadian Competition Tribunal’s decision on Tuesday to reject a Competition Bureau complaint about credit card fees.
She wasn’t alone.
“We get a lot of feedback from our members about this issue,” said Richard Truscott, Alberta director with the Canadian Federation of Independent Business.
He described how credit card fees, especially those for premium cards with incentives like travel points, erode companies’ bottom line.
“It’s having a major impact on the profitability of these businesses.”
Not only that, added Truscott, but the fees force them to charge consumers more for their products and services.
Gayle Langford, president of the Red Deer Chamber of Commerce, said the issue of credit card fees has been discussed by members of the Alberta Chambers of Commerce. The resulting debate revealed pros and cons to consumers being encouraged to pay with plastic.
“There’s a thinking that anything that gets anybody in to spend any money at any businesses is good,” said Langford.
“And yet on the other hand, the different affinity charges makes it a little harder for businesses to predict what their bottom line is going to be.”
She pointed out that consumers also get value from credit cards, such as insurance on big purchases and an easy way to track their spending.
Langford said members of the Red Deer Chamber haven’t been pushing issue. But she plans to review the reasoning behind the Competition Tribunal’s decision once its report becomes available, and anticipates that the matter will receive further consideration from the Chamber.
“I expect that it may be a focal point for discussion next year at the Alberta Chambers (policy meeting).”
The Consumers Council of Canada was also not critical of the Competition Tribunal ruling. It said in a release that allowing businesses to impose a surcharge on credit card transactions — a measure favoured by some — wouldn’t have been in the best interest of consumers.
Such fees would have been at the “whim of merchants,” it said, and meant unexpected charges for consumers at the point of payment.
Truscott doesn’t think these concerns are warranted.
“Any business owner is loathe to put in new barriers or increase costs to doing a transaction with one of their clients or one of their customers,” he said. “The threat would be enough of a deterrent.
“That’s been the experience in the U.S.; American companies have been allowed to surcharge and we’re not seeing widespread use of that power.”
The Consumers Council of Canada was also pleased with a suggestion by the Tribunal that government regulation of credit card fees might be in order.
Truscott said measures like a cap on fees have been implemented in other jurisdictions, like Australia. He also pointed favourably to the Tribunal’s conclusion that the credit card companies’ policies have had an adverse impact on competition. That could form the basis for continued efforts by the CFIB to challenge high credit card fees.
“Visa and MasterCard may have won this battle, but they may be on the road to losing the war.”
Part of that war involves educating credit card users about the effects of their spending choices.
“If the public was more aware of the impact of using certain cards on merchants, and even on the prices that they pay, they might be a little more eager pull out a low-cost card, or even use debit or cash,” said Truscott.
Blanchard agreed. She would like to see users of premium cards pay the associated costs, rather than the financial burden falling to businesses and ultimately other consumers.
“If they want the rewards, they should have the fees that come with it.”
hrichards@www.reddeeradvocate.com