Most consumers don’t think twice before tapping a card to pay for their purchase, but each tap or swipe adds an extra cost to the retailer.
“We’re paying to just let people pay,” said Jayme Melrose, co-owner of Props Floral Design in Halifax.
For every credit card transaction, retailers are charged a so-called interchange rate. It’s a fee that’s shared between credit card companies, payment processors and banks. The fee that’s charged varies, depending on what card is being used.
“Some credit cards are one and a half per cent, and some are two and a half to three per cent,” said Melrose.
Downtown at Bliss Caffeine Bar, co-owner Jenna Oosterholt said it can be difficult to know how much you’re paying each month in fees.
“It’s very hard to understand, and it’s extremely confusing,” she said. “You just feel like your hands are tied.
“This is just something you have to deal with at the end of the day just to make sure your customers have the ability to pay by credit card.”
Typically, it’s the cards that offer rewards that have those higher processing fees, and it can cost a business tens of thousands of dollars each year.
Props Floral Design doesn’t accept Amex because it has among the highest fees, but Melrose says it’s impossible to avoid all high-fee cards.
“We don’t have any opportunity to chose,” said Melrose. “People are ordering flowers for loved ones over the phone and they’re paying (with) Visa. (For) some, we’re paying a one per cent fee; some we’re paying a three per-cent fee.
The Canadian Federation of Independent Businesses is gathering signatures from businesses on a petition calling for Ottawa to negotiate with credit card companies and banks to reduce fees to below one per cent for small businesses.
“A large portion of these fees are going towards paying reward programs, which provide benefits for loyalty to banks rather than small businesses where the sales occur,” said Duncan Robertson, a policy analyst with CFIB.
Oosterholt supports the petition and notes that limiting transaction fees to one per cent would make a big difference for businesses.
“That’s money that we can keep, give back to our employees, give raises, do updates around our restaurant,” she said. “It would be super amazing if they could do that.”
Melrose also supports the push to lower fees, adding that it shouldn’t be up to small retailers to shoulder the cost of reward programs offered by larger companies.
“Credit cards are convenient, we all like them we all use them, that’s just fine. The lower fees are fine but so many of the retailers are paying for all of the points and extras in some cards.”
Ottawa has previously pledged to lower credit card processing fees for small businesses, but it hasn’t happened yet. Robertson said they are hoping that the upcoming budget includes something to help small businesses with these charges.
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