As convenient as credit cards are for customers, they are an expensive hassle for many businesses, and those prices are set to increase.
Mastercard says it will, by this summer, increase the transaction fees for businesses by twenty per cent.
Current Canadian transaction fee rates are between 1.7 to 3.5 per cent of the cost of each purchase, the second highest rate in the world.
Mastercard says it's maintaining a fair balance between banks, businesses and customers.
Richard Truscott of the Canadian Federation of Independent Business says it will be the consumers who bear the brunt of the increase.
“Consumers should realize the businesses pay those fees but they will pass it along to clients and consumers in the form of higher prices,” says Truscott. “So the public is paying for those fees in large measure.”
The fee increase is especially troubling for small business owners. Ester Tsang is the owner of a local dog grooming service. She says her monthly fees currently amount to an average of $300 as most of her customers pay with their credit cards.
The Canadian Federation of Independent Business says Canada’s Interac system may hold the key to reducing the credit card fees.
“We've been encouraging our members to talk to their customers and clients about paying with cash and debit,” says Truscott. “In Canada, we still have a really good debit system where it is only five or ten cents per transaction regardless of the transaction amount, whereas on the credit card side fees continue to creep up anywhere between 1.7 per cent and 3.5 per cent of the total sale.”
