Credit Card Fees for Merchants, Too
Consumers are well aware of credit card fees. But, merchants suffer, too.
According to a report by Nova Scotia’s Chronicle Herald, some merchants may be paying 2-3% of a total transaction to the credit card company now - but there’s more to come.
Small business owners worry that with new “premium” cards being offered by credit card companies will force them to pay nearly double the current fees. Mike Foran, a jewelry boutique owner, tells the Chronicle Herald, simply, “It’s a cash grab.”
The “premium” cards will offer incentives to consumer credit card holders for using their card, such as cash back, travel rewards and so on.
The irony is that that the cost for these incentives will be paid by the merchants with whom the consumer transacts.
The pain for the merchant is primarily in Canada (the U.S. already has high fees) where fees have been generally controlled by one agency, Internac. But the new cards bring changes.
Catherine Swift, president of the Canadian Federation of Independent Business, says in a press release, “For example, a purchase of $1,000 would now cost a business around 6.5 cents. But if the charge became 0.65 per cent — the U.S. average — the business would pay $6.50. That’s an increase of almost 10,000 per cent.”
September 18, 2008 – 4:27 pm