Credit Card Usage Fee | A threat to the survival of traders

The amounts merchants will be able to claim after a settlement in the class action lawsuit against Visa and Mastercard is “ridiculous,” says Michel Depatie, owner of Marché Dépatie, in Laval, who is concerned about the survival of independent merchants. The exorbitant fees that credit card companies always charge for every transaction.

Posted at 7:00 am

Nathael Morissette

Nathael Morissette

The person who also serves as chairman of the board of directors of the Quebec Food Retailers Association (ADA) has been campaigning for years for the federal government to push the file forward. Reducing the exchange fee charged by Visa and MasterCard to business is requested, each time a customer pays their bill with their card. Justin Trudeau’s liberals also stuck to it during the last election campaign.

In 2021, Mr. Depaty paid $250,000 in fees for a total of 300,000 transactions. By comparison, Interac Payments cost him $10,000 for the same number of transactions.

According to the Canadian Federation of Independent Business (CFIB), merchants must pay between 1.5% and 4% of the total invoice amount (with taxes) each time a consumer pays for a card transaction.

Credit cards are eroding profit margins in a very, very big way. We operate at very low profit margins in foodstuffs and this has a huge impact on the profitability of the company. It’s a big problem.

Michel Depaty, owner of Marche Debaty

Before the pandemic, the rate at which customers used credit cards in supermarkets was about 25%. It has now reached 35%. “If we end up with 75%, 80%, or even 90% usage rates, that will be the end of independent trade,” he warns.

According to data revealed by credit analysis firm Equifax Canada this week, credit card use is on the rise in the country. Monthly expenses related to this payment method increased by 17.5% in the first quarter of 2022 compared to the first quarter of 2021. In Canada, Ontario is experiencing the largest increase (20.4%), followed by Quebec, which has an 18.4% increase.

“Constrained demand and increased travel in the wake of the easing of COVID-19 restrictions, combined with hyperinflation, have led to one of the largest increases in credit card spending in the credit story,” said Rebecca Oakes, Vice President of Advanced Analytics, Equifax Canada. a permit.

working class

Moreover, after settling a class action lawsuit filed in 2001 against Visa and Mastercard, merchants who request it can receive a portion of the 131 million that must be paid by the two companies. They will therefore be partially reimbursed for the fees that Visa and Mastercard charge each time a consumer uses their credit card to pay for a transaction. To be eligible for a refund, you must have operated a business between March 23, 2001, and September 2, 2021. The businesses must have paid the exchange fee, explains Yasmine Genetti, vice president of national affairs at CFIB. He describes this decision as “good news.”

Small traders with annual revenue less than $5 million will be able to claim a maximum of $600, and for larger traders, this amount can be up to $5,000. Companies have until September 30, 2022 to submit their claim.

“That’s ridiculous. Nothing,” drops Michel Debaty, who must bear his annual credit card fees for much of the total amount of repayment. Still intends to file a complaint.

“Under this regulation, merchants will also be able to charge additional fees to customers who use concession cards in the provinces where this is permitted,” confirms Mr. Guénette.

Premium credit cards that allow users to accumulate points carry much higher exchange fees than other card types. From October, businesses will be able to claim an additional amount from customers who use them. Quebec only will not allow this practice by rule Consumer Protection Law Prevent the merchant from overcharging, Jasmine Janet explains.

“We want that to change,” he said. CFIB intends to lobby the provincial government on this issue.

For the Marché Dépatie owner, the real battle is about the fees that apply to all credit cards, without discrimination. Otherwise, he warns, “We’re going to hit the wall.”

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