0

Better Expect Credit Card Fees When You Shop Under New Rules Starting Yesterday (POLL)

Avatar of Mac Himself

Canadian Businesses Can Charge Credit Card Fees on Credit Card Payments

Credit Card Fees

So much for shopping locally, I’ll be doing most of my shopping online, if the new rules don’t apply to online credit card use. It shouldn’t be because you don’t have a choice but to use credit cards for online shopping, unlike in a physical store.

This news comes as a kick to the teeth for all Canadians as we all struggle to buy food and gas during this inflation crisis that’s been bending us all over by the hips.

CBC News Credit Card Fee

For about 30 years, this was not allowed. There is no Canadian federal legislation preventing this; instead, it was a rule put in place by Visa and Mastercard as part of the merchant agreement with businesses that decide to accept credit cards.

This policy has been beneficial for credit card companies, as it incentivizes consumers to use their credit cards on a level playing field with cash prices for goods and services. As a result, credit card companies made money from the businesses, and businesses made money from increased sales as customers enjoyed the convenience of cashless payments and not having to be at risk while carrying cash.

This change is part of the settlement of a class-action lawsuit brought on by businesses against Visa and Mastercard, alleging that the costs imposed on the merchants to accept credit cards as a payment method have been inflicting high costs.

Mastercard has modified its merchant agreement to allow businesses to levy a surcharge on customers up to 2.4% or the credit card fee for processing, whichever is lower. Consumers using debit and prepaid Mastercards will still be protected from having a surcharge imposed on them.

Visa hasn’t confirmed their exact policies yet, but if one were to guess, they’ll probably align closely with Mastercard. American Express is not part of the decision in the class-action settlement.

The Canadian government is also exploring legislation that would reduce interchange fees. No action by them yet though, and discussions have been sluggish throughout the pandemic. But in my opinion, these fees should be canned altogether.

So much for Credit Card Rewards

credit card fees
Credit card fees

These credit card fees are going to take a chunk out of your PC Financial rewards, your Canadian Tire Rewards, your Air Miles, and so on and so on. Rewards that encouraged consumers to actually use their credit cards. So this move is probably going to put that incentive in jeopardy. If the fees are going to cost me more than what I earn in rewards, I’m just not going to bother using my credit card and simply use my debit card instead.

Will the credit card companies backtrack if this is what consumers will end up doing? If consumers simply stop using their credit cards because the fees outweigh the incentives, will the credit card companies realize they’ve made a huge mistake?

POLL…

[socialpoll id=”2870420″]

88 / 100
Mac's Opinion