The story of how a B.C. man found his birth mother
After his adopted parents died, Dave Rogers set out to learn more about his birth mother. DNA results and a little help from friendly strangers would put him on a path to a small town in England.
Canadians may see a jump in businesses adding credit card surcharges as restrictions on the practice lift this week, though research from the Bank of Canada shows consumers have long been paying extra because of the payment option.
A report Wednesday from the Canadian Federation of Independent Business found that 19 per cent of small businesses are considering an added charge for credit card transactions to offset processing fees, while 26 per cent 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 to 2.5 per cent 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 usage, the survey found, while businesses that serve consumers were less likely to consider it out of fear of losing business. The survey found 40 per cent of small businesses say they are not sure yet, and 15 per cent do not intend to add an additional charge.
The report came ahead of new rules set to take effect Thursday that will give businesses the power to add a surcharge on credit card transactions.
The change in the credit surcharge rules 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 a 1.5 per cent processing fee to customers who use a credit card. The company said in August that 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 payments 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, which can be substantially lower.
The government has said it still trying to find a solution that would lower fees for small businesses, while protecting the existing rewards points credit cards provide to consumers.
Rewards points may make credit cards an attractive option for consumer, but research by staff at the Bank of Canada has found that consumers still pay far more than they get in rewards because of the credit card fees embedded in retail prices, with low-income consumers bearing a disproportionally high net cost.
In a working paper released last year, Marie-Helene Felt and other authors figured that Canadians with income below $25,000 pay about $17.33 a month in credit card costs passed along by merchants, while those making above $135,000 pay $51.96.
However, the highest income consumers, who most often use premium credit cards that charge the highest interchange fees, in turn get about $18.46 in rewards, while the lowest-income group gets only $2.46.
Overall, the authors estimate that in 2018 consumers paid $11 billion for credit card costs passed along by merchants, along with $2.2 billion for fees directly to financial institutions, and received $3.4 billion in rewards.
The Retail Council of Canada, one of numerous groups pushing for lower fees, says that on a $500 transaction, about $2 goes to the credit card companies and processors, while $8 goes to the banks of which about $2 of that goes back to consumers as rewards.
The push for progress on interchange fees in Canada comes after many other countries have already moved to reduce them.
Australia limited interchange fees to an average of 0.5 per cent in 2006, while the European Union imposed a cap of 0.3 per cent for credit card interchange fees in 2015, noting that excess fees are passed on to consumers who don't use credit cards as well. It also noted that EU banks had been bringing in about 13 billion euros a year from interchange fees, creating a strong incentive by banks to maintain the old system.
This report by The Canadian Press was first published Oct.5, 2022.
After his adopted parents died, Dave Rogers set out to learn more about his birth mother. DNA results and a little help from friendly strangers would put him on a path to a small town in England.
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