A small business owner in the south Okanagan is taking a stand against credit card processing fees that she says are affecting her bread and butter.
Shannon Peltier, owner of The Lake Village Bakery in Osoyoos, recently implemented a new policy to refuse credit cards as a method of payment.
Retailers are dinged for every credit card transaction and pay an even higher processing fee for premium cards.
The revenue from the processing fees goes back to the banks and credit card firms to help fund its rewards and loyalty programs.
“I don’t want to start cutting my staff, I don’t want to start cutting their hours,” Peltier said, “so then I go, ‘Well where I can make that money back?’”
She said she will save approximately $1,500 annually by accepting only cash and debit.
Like many Canadians, customer Sheila Arges relies on plastic to make her purchases.
“I use my credit card lots and then there’s the added bonus of getting Aeroplan points, there’s all of the seductions that hook me,” Arges said.
Arges supports the change.
“Initially I felt inconvenienced, we get used to just carrying plastic, but I do support it, they have to survive,” she said.
It’s actually gotten better for retailers since 2015.
That’s when Visa and Mastercard, Canada’s largest credit card companies, voluntarily lowered the transaction fees they charge merchants after pressure from the federal government and the business community.
“It really has been a lot like the Wild West in the last five or 10 years with credit card companies and processors and banks really operating in a way that has not been supportive of small business,” said Richard Truscott, B.C. and Alberta Vice-President of the Canadian Federation of Independent Business.
Fees are now capped at 1.5 per cent of the value of what’s being sold and the rate is frozen until 2020.
“We’re hoping that the industry steps up and continues to bring more competition into the industry and allowing lower fees and lower rates for small businesses, and of course that is going to benefit the public,” Truscott added.
Visa and Mastercard may soon allow merchants to add a surcharge to products purchased with premium credit cards, essentially putting the responsibility onto the customer to pay the additional processing fee.
It’s an option Peltier would consider to reduce the cost burden.
“Is it fair? Well, that would make it a little bit fairer and that’s also educating the customer, well, why do you do that? Well this is why. Oh OK, I’ll use my debit, because they don’t want to pay that either, right?” she said.
In a statement, the Department of Finance Canada said it is reviewing credit card processing fees, but at this point there are no federal restrictions on credit card acceptance fees paid by merchants.
“The Government is currently conducting an assessment of credit card fees to review the effects of the fee reductions and to ensure there is adequate competition and transparency for Canadian businesses and consumers,” a finance official said on Wednesday.
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