4 ms·

In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for t

by klyrs 4y ago

In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for the privilege. And yes, they're crying about it.

Beaver117 4y ago
Merchants weren't allowed to do that before? I've seen it occasionally in the US
- kbos87 4y ago
  I’ve seen it occasionally too, but it’s usually a violation of a merchants’ agreement with Visa/MC, who don’t want consumers to be discouraged to pay with their product.
  - jobs_throwaway 4y ago
    How I usually see this is instead of a surchage for credit card, stores offer a cash discount of 2-4%. Likely to get around exactly what you're talking about
- KMag 4y ago
  It used to be the case that the credit card companies put language in their merchant agreements language requiring the merchant to change the same price for credit and cash transactions. I'm not sure how many places they just lost the leverage to do that sort of thing and how many places enacted legislation to prevent that kind of strong-arming.
  - lotsofpulp 4y ago
    In the US, those merchant agreements were invalidated as of 2011 via the Dodd-Frank financial reform legislation.
richbell 4y ago
> In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for the privilege. And yes, they're crying about it. Didn't the CTRC ultimately reject this? Or are you talking about broader legislation? https://www.canada.ca/en/radio-television-telecommunications/news/2022/12/crtc-rejects-telus-request-to-charge-credit-card-processing-fee-for-regulated-home-telephone-services.html https://www.canada.ca/en/radio-television-telecommunications... Either way, it's a bit tone-deaf to say that people are crying about not getting free rewards. Many people are upset because companies like our notoriously anti-competitive telecom industry already factor merchant fees into the costs; adding on a separate charge is essentially double-dipping in a time of record inflation and profiteering.
- bryanlarsen 4y ago
  The CRTC disallowed Telus from doing this, but every merchant not covered by the CRTC is now allowed to disregard any "best price" clause in their credit card agreements. I expect the first merchants to take advantage of the new rules will be some of those Mom & Pop stores that currently have the "minimum $10 for credit card" signs.
  - klyrs 4y ago
    The first merchant I observed taking advantage of the law was the RCMP, for what it's worth.
    - voisin 4y ago
      Utilities and government groups have always seemed to have extra fees for credit cards.
  - voisin 4y ago
    Did the CRTC disallow or say they couldn’t until a review or hearing was complete? I thought they just delayed (for now)
- klyrs 4y ago
Mister_Snuggles 4y ago
Some merchants were already allowed to add a credit card surcharge. Some post-secondary institutions did this for years before this change came in. The funny thing is that, apart from the aforementioned post-secondary institutions, I haven't seen anyone else add this surcharge. Maybe I'm just not shopping in the right places, but so far this change has amounted to absolutely nothing.
hnburnsy 4y ago
Cash and check handling also have costs through leakage and bank fees (at least in the US banks charge money for taking cash deposits from businesses). Many merchants are happy to take credit cards and just mark up the price accordingly. Ask the Cannabis industry about the hassles of handling cash.
WirelessGigabit 4y ago
I disagree with this. This assumes that cash is the baseline. And all too often the cost of handling cash is not taken into account when comparing it to credit cards.
- klyrs 4y ago
  Debit is my baseline. It's unfortunate that banking technology is so far behind; in Canada, anyway, debit doesn't incur interchange fees. That's great at point of sale, but notably kludgy for bill payments.
gnicholas 4y ago
This is allowed in the US. But it's not like the surcharge is tied to the amount of rewards on the card, at least here. If you have a no-rewards card, you pay the same surcharge as if you have a upper-tier Amex. And since most places don't make it very obvious that they're charging a cc surcharge, customers generally don't even realize they're paying it. I was not thrilled when I saw it on my receipt, after not being told there was a credit card charge. I don't mind a surcharge but it felt like a cash-grab because they didn't tell people (or ask them, which would be even better).
BeetleB 4y ago
Interesting to hear this. I was once visiting Canada about a decade ago and tuned in to a radio station (likely some local CBC station), and they were debating this very issue: Can it be made legal for businesses to charge more for CC transactions? I learned one thing: The amount a CC charges the business is not fixed - and cards with rewards result in a higher fee for the business. At some point a retired CC industry shill (who clearly identified his background) called in and his explanation on all this was the most reasonable: In the vast majority of cases, a business's revenue goes up by accepting CC payments. Some of it is because customers have become accustomed to paying with it and may not carry cash, but the bulk of it is due to the convenience - and this is heavily backed up by research: The easier and more convenient you make transactions, the more consumers spend. The amount businesses pay the CC company in fees is more than compensated for by the increased revenue. Most businesses will treat these fees as part of the cost of doing business, and price their products accordingly. Just as they do when their utility rates go up or the price of gas goes up. Businesses support the campaigns about this issue so that they can get the best of both worlds: Increased revenue due to CC usage as well as passing those fees on to the consumer. They are not waging this battle to benefit the consumer, but to offload a cost of doing business to the consumer. In principle, this is all fine, but the consumers need to be aware of it! Ultimately the consumer is paying those fees whether a business charges extra for it or not. And of course, if the goods that business is selling is priced the same as other businesses not passing that charge on directly, then the consumer is "double paying" - the goods' price already has that fee baked into it even if they pay cash, and when they pay by card, they'll pay it twice at those businesses. Having known some business owners, his take is highly believable :-) As an example, the AirBnB cleaning fee is not just for cleaning, but a way for the host to make extra money (easy to Google, and I know multiple hosts personally). Almost any business that charges extra for optional amenities is using it as a way to make even more money. And that was the CC shill's ultimate point. CC companies are doing things to increase their revenue, as are the businesses. A given business may say they're campaigning for this in order to benefit the consumer, but in most cases they're not really benefiting the consumer and are simply trying to increase their revenue. The exception is when they really do have reduced prices compared to other stores.
- tzs 4y ago
sofixa 4y ago
IMO it's much better to do it the EU way - cap on the fees, and a ban of adding a surcharge for cards (because now they're competitive if not cheaper than handling cash).
WastingMyTime89 4y ago
Meanwhile in Europe we just aggressively capped the fees card networks can charge merchants. No one has rewards but everyone benefits from cheap card payments.
- snapplebobapple 4y ago
  This is the correct way.

by klyrs 4y ago

Beaver117 4y ago

Merchants weren't allowed to do that before? I've seen it occasionally in the US

kbos87 4y ago
I’ve seen it occasionally too, but it’s usually a violation of a merchants’ agreement with Visa/MC, who don’t want consumers to be discouraged to pay with their product.
- jobs_throwaway 4y ago
  How I usually see this is instead of a surchage for credit card, stores offer a cash discount of 2-4%. Likely to get around exactly what you're talking about
KMag 4y ago
It used to be the case that the credit card companies put language in their merchant agreements language requiring the merchant to change the same price for credit and cash transactions. I'm not sure how many places they just lost the leverage to do that sort of thing and how many places enacted legislation to prevent that kind of strong-arming.
- lotsofpulp 4y ago
  In the US, those merchant agreements were invalidated as of 2011 via the Dodd-Frank financial reform legislation.

richbell 4y ago

> In Canada, we finally passed a law to allow merchants to add a credit card surcharge. People accustomed to getting free rewards will be paying up to 2.4% for the privilege. And yes, they're crying about it. Didn't the CTRC ultimately reject this? Or are you talking about broader legislation? https://www.canada.ca/en/radio-television-telecommunications/news/2022/12/crtc-rejects-telus-request-to-charge-credit-card-processing-fee-for-regulated-home-telephone-services.html https://www.canada.ca/en/radio-television-telecommunications... Either way, it's a bit tone-deaf to say that people are crying about not getting free rewards. Many people are upset because companies like our notoriously anti-competitive telecom industry already factor merchant fees into the costs; adding on a separate charge is essentially double-dipping in a time of record inflation and profiteering.

bryanlarsen 4y ago
The CRTC disallowed Telus from doing this, but every merchant not covered by the CRTC is now allowed to disregard any "best price" clause in their credit card agreements. I expect the first merchants to take advantage of the new rules will be some of those Mom & Pop stores that currently have the "minimum $10 for credit card" signs.
- klyrs 4y ago
  The first merchant I observed taking advantage of the law was the RCMP, for what it's worth.
  - voisin 4y ago
    Utilities and government groups have always seemed to have extra fees for credit cards.
- voisin 4y ago
  Did the CRTC disallow or say they couldn’t until a review or hearing was complete? I thought they just delayed (for now)
klyrs 4y ago

Mister_Snuggles 4y ago

Some merchants were already allowed to add a credit card surcharge. Some post-secondary institutions did this for years before this change came in. The funny thing is that, apart from the aforementioned post-secondary institutions, I haven't seen anyone else add this surcharge. Maybe I'm just not shopping in the right places, but so far this change has amounted to absolutely nothing.

hnburnsy 4y ago

Cash and check handling also have costs through leakage and bank fees (at least in the US banks charge money for taking cash deposits from businesses). Many merchants are happy to take credit cards and just mark up the price accordingly. Ask the Cannabis industry about the hassles of handling cash.

WirelessGigabit 4y ago

I disagree with this. This assumes that cash is the baseline. And all too often the cost of handling cash is not taken into account when comparing it to credit cards.

klyrs 4y ago
Debit is my baseline. It's unfortunate that banking technology is so far behind; in Canada, anyway, debit doesn't incur interchange fees. That's great at point of sale, but notably kludgy for bill payments.

gnicholas 4y ago

This is allowed in the US. But it's not like the surcharge is tied to the amount of rewards on the card, at least here. If you have a no-rewards card, you pay the same surcharge as if you have a upper-tier Amex. And since most places don't make it very obvious that they're charging a cc surcharge, customers generally don't even realize they're paying it. I was not thrilled when I saw it on my receipt, after not being told there was a credit card charge. I don't mind a surcharge but it felt like a cash-grab because they didn't tell people (or ask them, which would be even better).

BeetleB 4y ago

Interesting to hear this. I was once visiting Canada about a decade ago and tuned in to a radio station (likely some local CBC station), and they were debating this very issue: Can it be made legal for businesses to charge more for CC transactions? I learned one thing: The amount a CC charges the business is not fixed - and cards with rewards result in a higher fee for the business. At some point a retired CC industry shill (who clearly identified his background) called in and his explanation on all this was the most reasonable: In the vast majority of cases, a business's revenue goes up by accepting CC payments. Some of it is because customers have become accustomed to paying with it and may not carry cash, but the bulk of it is due to the convenience - and this is heavily backed up by research: The easier and more convenient you make transactions, the more consumers spend. The amount businesses pay the CC company in fees is more than compensated for by the increased revenue. Most businesses will treat these fees as part of the cost of doing business, and price their products accordingly. Just as they do when their utility rates go up or the price of gas goes up. Businesses support the campaigns about this issue so that they can get the best of both worlds: Increased revenue due to CC usage as well as passing those fees on to the consumer. They are not waging this battle to benefit the consumer, but to offload a cost of doing business to the consumer. In principle, this is all fine, but the consumers need to be aware of it! Ultimately the consumer is paying those fees whether a business charges extra for it or not. And of course, if the goods that business is selling is priced the same as other businesses not passing that charge on directly, then the consumer is "double paying" - the goods' price already has that fee baked into it even if they pay cash, and when they pay by card, they'll pay it twice at those businesses. Having known some business owners, his take is highly believable :-) As an example, the AirBnB cleaning fee is not just for cleaning, but a way for the host to make extra money (easy to Google, and I know multiple hosts personally). Almost any business that charges extra for optional amenities is using it as a way to make even more money. And that was the CC shill's ultimate point. CC companies are doing things to increase their revenue, as are the businesses. A given business may say they're campaigning for this in order to benefit the consumer, but in most cases they're not really benefiting the consumer and are simply trying to increase their revenue. The exception is when they really do have reduced prices compared to other stores.

tzs 4y ago

sofixa 4y ago

IMO it's much better to do it the EU way - cap on the fees, and a ban of adding a surcharge for cards (because now they're competitive if not cheaper than handling cash).

WastingMyTime89 4y ago

Meanwhile in Europe we just aggressively capped the fees card networks can charge merchants. No one has rewards but everyone benefits from cheap card payments.

snapplebobapple 4y ago
This is the correct way.