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Small Business Can Now
Add Credit Card Surcharge

October 6, 2022

Author: HIR

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Merchants now have the ability to add surcharge on credit card transactions to offset credit card processing fees, and nearly one in five (19 per cent) small businesses are considering it, says a survey by the Canadian Federation of Independent Business (CFIB).


As a result of a recent class action settlement, Visa and Mastercard will give small businesses the power to add a surcharge on some credit card transactions starting October 6, 2022, to offset merchant fees. Due to consumer protection laws in Quebec, this option will not be available in that province.


Corinne Pohlmann, senior vice-president of national affairs at CFIB says, “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. 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."


Power To Surcharge

Nineteen per cent of merchants intend to use the new power to surcharge, while a further 26 per cent say they will do it if their competitors or suppliers do. More than one-third (40 per cent) of small firms say they are not sure yet if they will surcharge, while 15 per cent say they don't intend to do it.


Businesses that often sell to other businesses (B2B), like construction, manufacturing, and finance/insurance, are most likely to report they will surcharge for credit card usage, while businesses that serve consumers are less likely to say they will do it. Among consumer-facing sectors, a total of 19 per cent of hospitality, 17 per cent of personal services, and 12 per cent of retailers intend to surcharge.


"These data reveal the frustration so many business owners feel about the high cost of credit card processing, which can eat about 1.5 to 2.5 per cent of every sale," says Dan Kelly, CFIB president. Currently, 35 per cent encourage customers to use other forms of payment and 28 per cent say they increase their prices to absorb credit card fees.


This is the case for the hardware and building material retail industry, says Dave Campbell, president of the Lumber and Building Materials Association of Ontario (LBMAO). “Most building supply retail credit card transactions are processed through their buying group affiliations,” he says. “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.”


CFIB continues to call on the federal government to deliver on its 2021 election promise to further reduce ongoing credit card processing fees for small business. Small businesses in Quebec should also have the right to surcharge to offset their credit card fees.

Reduce Cost Burden

"The power to surcharge will allow merchants to address their rising operating costs, push back against future credit card fee hikes and keep their prices competitive," says Kelly. "With mounting pressures small businesses are facing due to inflation and government-imposed costs, surcharging is another way to reduce their cost burden."


Merchants can now apply to surcharge by registering their plans with their credit card processor and Mastercard (Visa requires registration with the processor only). Once they have registered their intent to surcharge, merchants must then wait 30 days before they can start to apply a surcharge on Visa and Mastercard transactions.


"All payment processors should be ready to support merchants interested in surcharging as soon as possible. If the processors aren't ready, CFIB is urging them to find a solution for merchants who wish to start surcharging," says Pohlmann.


For more information and some tools related to surcharging, business owners can visit

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