Oct 6, 2022
Small Business Can Now Add Credit Card Surcharge
Merchants now have the ability to add surcharge to credit card transactions to offset credit card processing fees and 19 per cent of small businesses are considering it, says a Canadian Federation of Independent Business (CFIB) survey. As a result of a recent class action settlement, starting today Visa and Mastercard will give small businesses the power to add a surcharge on some credit card transactions to offset their merchant fees. Due to consumer protection laws in Quebec, this option will not be available in that province. "Most smaller merchants are still on the fence or don't plan to surcharge as they don't want to risk losing customers. However, it's important for them to know they will have this option," says Corinne Pohlmann, senior vice-president of national affairs at CFIB. "Small businesses have long been dealing with expensive credit card processing fees and trying to find ways to absorb the cost of accepting premium cards without the ability to surcharge or refuse those cards. Surcharging gives them the ability to offset some of their costs and be transparent with their customers about the fees they pay." While 19 per cent of merchants intend to use the new power to surcharge, 26 per cent said they will do it if their competitors or suppliers do. However, 40 per cent of small firms said they are not sure yet if they will surcharge, while 15 per cent don't intend to do it. Businesses that often sell to other businesses (B2B), like construction, manufacturing, and finance/insurance, were most likely to report they will surcharge for credit card usage, while businesses that serve consumers were less likely to say they will do it. The hardware and building material retail industry is likely to absorb the cost, says Dave Campbell, president of the Lumber and Building Materials Association of Ontario (LBMAO). “Credit card fees are a cost of doing business and the selling prices of the products should reflect those costs. This is reminiscent of the surcharges that were put in place for recycling batteries, caulking, etc. back many years ago. Most retailers will not want to add additional surcharges to their customers’ receipts as this would have a negative impact on the relationship with their customers.” For more information, visit Small Business Can Now Add Credit Card Surcharge on the Home Improvement Retailing website.
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