If you’ve ever been at a U.S. gas station you’ve seen the double pricing signs: One price for cash and another for credit cards. It looks like that’ll come to Canada soon.
Retailers pay between $5 and $6 billion in merchant fees to accept credit cards. It’s part of their cost of doing business, and you have to know a ton of that is included in their pricing. Now they want the right to charge extra if you’re paying by credit card. In other words, they want you to pay the 2 to 3% discount they have to absorb.
It started in the US in the mid 2000’s with lawsuits against Visa, MasterCard and American Express. There, just like in Canada, when a merchant signs up for credit card acceptance, they agreed not to surcharge, and to treat credit cards as cash. This is a restriction that ended in the U.S. just last year. And remember what I keep saying: What happens in the U.S. comes to Canada sooner or later.
Credit card issuers want to make money, retailers want to make money, and you want the points, perks, or free toaster. Credit card companies keep adding annual fees and compete to get into your wallet with more perks. How do they make even more money? Different credit cards with increased perks, but also increased annual fees AND higher merchant fees. The Visa Signature card, for example has a much higher merchant rate than normal cards. I’m just setting up a U.S. merchant account and those cards increase my discount charge by over 50% compared to others.
Should I have the right to refuse the card or to surcharge you if you want to pay with it? Of course! Should Visa or MasterCard be telling me what I can and cannot charge? Of course not! It just becomes a challenge for any retailer who wants the business but not all the increased backdoor costs that you don’t even know exist! You might not be happy with that answer, but you do have the right to pay with another card, to pay cash, or by debit card.