Does the card in your wallet cost small business a fortune?
TORONTO, Sept. 10, 2011 /CNW/ - After significant negotiations with
Canadian credit card companies, the Canadian Federation of Independent
Business (CFIB) released today a comprehensive list of the cost levels
of nearly every credit card in the wallets of Canadian consumers and
businesses. "There are a staggering number of cards on the market
today in Canada, with over 200 MasterCard and VISA cards on our rate
chart alone," said Dan Kelly, CFIB's sr. vice-president of legislative
affairs. "Consumers and small businesses have had virtually no ability
to understand the costs their cards impose on merchants until today,"
"While banks and other card issuers have had high cost corporate cards
for a long time," Kelly stated, "over the last two years, many
financial institutions have been pumping out premium credit cards to
consumers." Regular cards may cost small business under 1.75 per cent
of the sale in total fees while some premium cards cost over 2.7 per
"Small merchants are asking all Canadians to examine the card in their
wallets against the list CFIB has issued to check if their card is
imposing high costs on local entrepreneurs," Kelly said. "The credit
card industry is so confusing, consumers holding a President's Choice
MasterCard, for example, may think they are using a low cost, budget
card, but in fact may be forcing merchants to pay 2.5 per cent of their
entire purchase in fees to accept the card. This is over 40 per cent
more in total fees than a consumer using a regular MasterCard. A
consumer collecting Aeroplan points with a CIBC Aerogold Infinite VISA
can cause a merchant to pay 30 per cent more in fees than one
collecting Aeroplan points with a CIBC Aerogold VISA," Kelly advised.
Several interesting stories emerge from CFIB's analysis:
New "uber" premium cards from MasterCard: Recently, MasterCard introduced an even more expensive credit card for
some merchants. MasterCard World or World Elite cards issued by Bank
of Montreal, CIBC, Royal Bank and Capital One are called "premium high
spend" cards and can carry among the highest merchant fees out there.
BMO/CIBC top issuers of high cost consumer cards: Of the major banks, Bank of Montreal and CIBC are the main issuers of
"premium" credit cards for consumers in Canada - each with six separate
high cost cards. TD Canada Trust and Scotiabank have the fewest
premium consumer cards of the major banks, with one each.
Some banks do better: Of the smaller financial institutions, CFIB is pleased to note that all
credit unions, Desjardins, MBNA (recently purchased by TD Canada Trust)
and Laurentian have no premium cards for consumers. On the other hand,
HSBC has three of its four cards in the premium category.
Consumers can still get points without higher costs for merchants: Many cards that offer points and rewards to consumers are actually
regular credit cards and do not impose higher rates on merchants. For
example, the TD Platinum Travel VISA and the ATB Gold Cash Back
MasterCard provide consumer benefits at regular merchant costs.
Card names don't tell the whole story: Some premium cards have special names like VISA Infinite, but other
cards, like MasterCard "high spend" cards keep the same name but
increase the costs to merchants once a consumer hits a certain spending
or income threshold and gives consent. Most cards with "gold" or
"platinum" in their name are actually regular cost cards.
American Express cards impose very high costs: While CFIB is pleased that American Express does not issue separate
premium cards, all of its regular cards impose very high costs on
CIBC drops a premium card: After CFIB announced its plans to do this analysis, CIBC voluntarily
dropped its "high-spend" Aventura MasterCard into the regular cost
category. CFIB notes this is a very positive development and hopes
other financial institutions consider doing the same.
"As all polling data shows Canadians have enormous respect for small
business owners, we ask consumers who may have a higher cost premium or
corporate credit card to consider switching to one from the regular
cost column," Kelly suggested. "The good news is that there are dozens
of credit cards out there offering consumers points without imposing
sky high fees on smaller merchants."
CFIB also notes that thousands of merchants have recently started to
post special CFIB signage in their stores to encourage consumers to pay
with lower cost payment methods. "When you visit a smaller merchant,
we ask you to consider paying with a regular cost credit card, your
Interac debit card or cash in order to help merchants keep costs down,"
Kelly said. "In addition to helping your local entrepreneurs, you'll
be helping keep consumer prices down for us all," he concluded.
CFIB's credit card rate chart can be found at www.cfib-fcei.ca/debitcredit
As Canada's largest association of small- and medium-sized businesses,
CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes
direction from more than 108,000 members in every sector nationwide,
giving independent business a strong and influential voice at all
levels of government and helping to grow the economy.
SOURCE CANADIAN FEDERATION OF INDEPENDENT BUSINESS
For further information:
or to arrange an interview with Dan Kelly, contact Gisele Lumsden at 647 808-5769 or email firstname.lastname@example.org