A new study finds that most Canadians have a negative reaction to shops that charge additional fees for credit card payments.
According to her online survey of 2,774 Canadians conducted November 28-30 by the Angus Reed Institute, those who said they would accept additional charges for paying by credit card were those who answered She was only one in ten of her For the rest, switch to another payment method, such as cash, or stop shopping at the store altogether.
Credit cards have become the most popular payment method in recent years, and their use surged during the COVID-19 pandemic. However, most merchants have personally complained about the highest processing fees for credit card payments.
Stores were recently given the option to pass on these fees to customers as a result of a legal settlement, but so far have publicly said they would do so, fearing it would lead to consumer backlash. Very few companies have.
Respondents to the Angus Reed Institute survey expressed slightly more sympathy for small businesses than large retailers. If a small store charges a surcharge for credit card payments, 59% of her respondents said they would switch to another payment method, and only 28 said they would stop going to that store. %was. However, if a major retailer, airline, or telecommunications company charges a surcharge, respondents are as likely (46%) to switch payments as they are to stop shopping with that company (44%). I answered. Shachi Kurl, president of the Angus Reid Institute, said credit card users apparently don't like paying extra, but they seem to have a better understanding of why small businesses need to charge extra. says.
“It’s a recognition of the fact that smaller family-owned and entrepreneurial businesses are far less able to afford the costs of processing credit card payments than larger retailers,”
Most of the credit card transaction fees go to the financial institution that issues the card, and the proceeds go to the loyalty program (especially for high-value cards).
A Bank of Canada study published in March found that people with higher incomes and higher spending were more likely to use credit cards than other forms of payment. attributed to a loyalty program that rewards cardholders for purchases of A study by the Angus Reid Institute found that respondents who reported higher incomes were more likely to use credit cards. For example, 64% of those earning more than $200,000 a year said they would use credit cards “as much as possible,” while only 25% of those earning less than $25,000 said the same. I was.
High-income respondents were most sensitive to merchants charging fees.
73% said they would waive the rewards program if he had to pay an additional 1.5% for each credit card purchase.
"While high-income Canadians can undoubtedly be able to incur additional costs more than low-income individuals, it does mean that high-income individuals consider it a reasonable cost to incur such costs. "Canadian consumers, regardless of their income level, reject expenses that they feel are not worth the money they spend."
Is It Legal To Charge Customers A Credit Card Processing Fee In Canada ?
In Canada, it is not legal to charge customers a credit card processing fee. This is because the Competition Act prohibits businesses from charging customers an additional fee for using a credit card when making a purchase. The Competition Act is enforced by the Competition Bureau and applies to all businesses operating in Canada, whether they are located within the country or abroad. Merchants who are found to be in violation of this law can be fined up to $10 million. As such, it is important for businesses to be aware of this legislation and ensure that they are not charging customers an additional fee for using a credit card.
Is There A Way To Avoid Credit Card Processing Fees In Canada?
In Canada, credit card processing fees are a fact of life. Businesses must pay a fee to their merchant processor, which is typically a percentage of the total sale. Unfortunately, there is no way to completely avoid these fees. However, there are some strategies that businesses can use to reduce their credit card processing fees. These include negotiating lower rates with your merchant processor, offering discounts for customers who pay with cash or debit, and accepting lower-fee cards, such as American Express. Additionally, businesses can use payment solutions providers that offer lower transaction fees than traditional merchant processors. By implementing these strategies, businesses can reduce their credit card processing fees and increase their profitability.
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What Payement Method Does Not Charge Fees ?
When it comes to finding a payment method that does not charge fees, there are several options available. One of the most popular options is cash. Paying with cash does not require any additional fees and allows you to easily track your spending. Additionally, many online retailers and services accept payment via check or money order, which also provide free payment methods. Finally, many banks offer free transfers between accounts, allowing you to transfer money between your own accounts without incurring any additional fees. In all of these cases, the payment method does not charge any additional fees.
Why Is Processing Fee So High In Canada ?
Processing fees in Canada are notoriously high, and there are a number of factors that contribute to this. One of the most common reasons is that the cost of processing payments is higher in Canada due to the high cost of infrastructure and the cost of doing business in the country. Many banks and other financial institutions also charge high processing fees to cover the cost of their services, such as the costs associated with setting up and maintaining accounts, processing transactions, and providing customer service. Additionally, the cost of processing payments often includes the cost of processing credit cards, which is also higher in Canada due to the high cost of credit card processing fees. Finally, processing fees in Canada are often higher due to the cost of regulatory compliance, which is also higher in Canada due to the country's strict regulations.