Small businesses in Canada are calling on the federal government and payments industry to move faster on capping processing fees for credit card usage by consumers.
The Canadian Federation of Independent Business released results from a recent survey that found about three-quarters (74 per cent) of small businesses want to see processing rates from the likes of Visa and Mastercard capped at 1 per cent when using their services.
That means interchange rates for small businesses would need to be set at 0.7 per cent or less, which is half of the current average of 1.4 per cent.
CFIB noted that its research shows many small businesses (81 per cent) take a hit to their bottom lines to cover the costs of accepting credit cards. However, given consumer preference for using credit cards — which only grew during the COVID-19 pandemic and as online shopping increases —merchants feel they have no choice but accept credit cards to retain and grow business.
In a survey of automotive aftermarket businesses by Auto Service World, passing on credit card processing fees was the preference of a minority — 19 per cent said they would pass on fees to consumers, while 25 per cent said they would do so for business customers.
Several responded that the cost of processing fees is already built into what they charge to customers. “We have chosen not to add fees at this point. In my opinion, all businesses have already factored this in,” said one respondent.
Credit card processing fees are especially more difficult to handle for smaller businesses, according to CFIB president Dan Kelly.
“While a handful of large multinationals can get special deals, small firms aren’t able to negotiate lower interchange rates on their own,” he explained. “Ensuring that smaller merchants can access lower rates — including for e-commerce — is key to relieving some cost pressures, encouraging more small businesses to sell online and levelling the playing field with larger firms.”
The group has three recommendations as the spring budget approaches for the federal government:
Have your say: