Auto Service World
News   October 28, 2022   by Adam Malik

How the aftermarket will treat credit card fees

We asked you if you'd pass on credit card processing fees to customers. Here's what you said...

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For now, most aftermarket businesses won’t pass on credit card fees to their customers. But at least a third of the industry is undecided.

Following a class action lawsuit, most Canadian merchants are now able to pass on credit card processing fees to their customers. Those in Quebec, however, will not due to the province’s consumer protection laws.

A survey by the Canadian Federation of Independent Business (CFIB) found that about one in five (19 per cent) would look to offset fees by passing the cost on to consumers. CFIB also found that merchants that operate in a business-to-business environment would be more likely to pass on fees than those that deal with consumers.

Auto Service World asked its readers how they will approach this. The results were more or less in line with the greater business community.

At least, for now. Most are still undecided about how they will proceed.

When asked if they would pass on fees to consumers, most (43 per cent) said no. But not far behind were those who are still thinking about it — 39 per cent said they’re undecided. One in five (19 per cent) said they would, matching CFIB’s findings.

When looking at whether they’d pass on fees to business customers, aftermarket professionals were more likely to pass on those costs (25 per cent) in this case. However, like with consumers, most (43 per cent) said they wouldn’t and almost a third (32 per cent) were undecided.

“Merchants have been paying for years credit card commissioned fees to Moneris or the … and been unable openly to ask reimbursement,” one respondent wrote in the option comment section. They answered they will pass on fees no matter the type of customer. “Credit card users benefited accumulating [cash] points or Air Miles benefits. It’s about time to stop the hemorrhage.”

Several respondents said they would not pass on the fees explained the added cost is already built into their pricing structure for all customers.

“We have chosen not to add fees at this point. In my opinion all businesses have already factored this in,” said one respondent.

A pair of respondents who said no in both cases explained that doing so would cause them to lose customers. Similarly, one respondent cited added fees would simply by another price hike on consumers.

“It’s better to lose 2 per cent than 100 per cent,” observed another.

Even though one respondent said they wouldn’t pass on fees to either type of customer, they did note that “the credit card holders should incur all fees not the businesses accepting them.”

One who was undecided said they would wait to see what others do first. “I will if competition does. But I won’t be the first.”

Another undecided respondent explained that it could depend on the size of the customer’s bill. “I place a thresh hold where above that I charge an extra 2 per cent. But below, not sure how I would implement it yet. We’ll see.”

On the yes side, one who said they would charge consumers the extra fees explained that they pay about $30,000 a year in credit card fees. “With an average of almost 2 per cent per transaction, it adds up fast and reduces our bottom line.”

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3 Comments » for How the aftermarket will treat credit card fees
  1. Shawn Greenberg says:

    It blows me away that a lawsuit against the CC companies for charging so much has resulted in allowing the fees to be passed on to the consumer rather than lower them. And no one has notice that they will get 2% of the increased transaction. So they are making 2% off the 2% charged. The only winner is the one who got sued. Brilliant outcome

  2. Sean O'Gorman says:

    Most shops look at what their costs are for CC charges for the year and factor that into what they are charging, it is a cost of doing business and is adjusted for by making sure they are charging the necessary rates to cover this expense. Either way the customer is paying for the charges, and the credit card company is making a profit (not a dirty word) for their services. But I get paid and to date I have not had a cc charge challenged, I have had many cheques bounce over the years.

    • Geoff says:

      Exactly. 2% is a relatively small fee to pay for someone else to take all the risk. As a result, gone are the days of charge accounts and chasing people for money. And if someone cant get a credit card, they definitely arent getting credit from me.

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