Consumers may be dinged more for card purchases

Customers may end up paying more at the till if merchants are given the ability to pass on credit card transaction fees. (CTV)

Canadian retailers may soon get permission to pass on credit card transaction fees onto their customers, a B.C. consumer advocate warns.

A competition bureau tribunal is near a decision on whether stores can start charging per-transaction credit card fees to consumers.

But retailers already include the fees in the price of their goods and stand to profit from the potential change, said Bruce Cran, president of the Consumers’ Association of Canada.

“Anything that costs you $100 now and includes that fee won’t be dropped down to $97 and then added on a few per cent,” Cran said. “They’ll be keeping their same prices.”

Cran said businesses will be looking to pass on charges between five and six per cent of the purchase price onto customers.

“There’s $5-billion in charges for these fees now,” he said. “They want to transfer that from their books to the consumers, so this is going to be devastating for Canadians.”

But a Retail Council of Canada spokesman says the power to surcharge customers only makes up for merchant fees that have increased dramatically in the last few years.

“What we’ve seen with Visa and Mastercard as recently as this year is their rates to merchants and costs their merchants are incurring for accepting credit cards are going through the roof,” Dave Wilkes said. “It really is like the wild west out there.”

Dan Kelly, president of the Canadian Federation of Independent Business, said while the power to surcharge is appealing to merchants, it doesn’t mean it will be done automatically.

“I don’t believe that many merchants will actually take up these new powers,” Kelly said. “It’s the actual power to levy a surcharge that we think will send Visa and Mastercard and the banks the message that they can’t get away with continual fee increases on a regular basis.”

The competition bureau tribunal is also set to rule on whether retailers can start rejecting some premium credit cards, which come with higher reward miles and points but also higher transaction fees for merchants.

Retailers in 40 U.S. states were given the power this week to pass credit card transaction fees between two and four per cent along to consumers, while Australia gave merchants the ability in 2003.

With a report from CTV British Columbia's Shannon Paterson