The business community charged into court and won the right, in a class action lawsuit, to directly pass the price of a credit card transaction on to the customers.
But winning the right and exercising the right are two different things. Many businesses are claiming to be content to carry on as usual, just blending the cost of providing Visa and MasterCard (the two credit cards affected) into their everyday prices. That seems to be the way Burns Lake is going with the new choice they have.
“From the businesses I have talked to here in Burns Lake, almost everyone has said that they will not be passing the fees onto their customers because they do not agree with it,” said Randi Amendt, manager of the Burns Lake & District Chamber of Commerce.
It’s not a simple decision. The reason for the court case was relief from the charges merchants have to absorb every time a credit card is used in their store, but were forbidden from directly applying it to the bill.
If a business wants to do the direct surcharge now, they can only do so up to a maximum of 2.4 per cent of the transaction’s price, it has to be specified on the customer’s receipt, and making the move has to be communicated to the customers prior to purchase (via a sign, for instance). That’s going to annoy some customers and potentially change their mind. It might just be to switch to a different form of payment like cash or debit (but lose out on rewards points), but it might be to switch where they do their shopping.
Some businesses in Burns Lake have few competitors, so they might just dive in. But Lakes District consumers already travel to larger centres to combine holidaying with shopping, so this might be another disincentive to shop local.
Larger chain stores have the ability to absorb such a hit easier than a mom-and-pop, but they are also the ones getting hit the hardest by the credit card charges.
Telus, for example, has already specified that it will charge a 1.5 per cent fee for credit card payments. The Lakes District News contacted Loblaw Companies, parent company of Wholesale Club and Pattison Food Group, parent company of Save-On-Foods, for their comment. Pattison Food Group did not respond by deadline and Loblaw replied that “No, we are not planning to.”
Amendt said that she had “talked to one bigger store and they agreed that they didn’t agree with it and wouldn’t pass that on. The businesses I talked to just don’t want to take a chance losing their customers and didn’t want to impose it on them. They were all pretty uniform and this came independent of each other. But that’s now. They may bow to the pressure.”
The Canadian Federation of Independent Business, of which there are Burns Lake members, did a nationwide survey and found that 19 per cent of merchants intend to use the new power to surcharge, while a further 26 per cent said they will do it if their competitors or suppliers do. Forty per cent of small firms said they are not sure yet, while 15 per cent said they don’t intend to do it.
The CFIB survey revealed that businesses often selling to other businesses, like construction, manufacturing and finance/insurance, were likeliest to surcharge for credit card usage, while businesses that serve consumers were less likely to say they will do it.
“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,” said CFIB president Dan Kelly.