These days, it’s very rare to find someone who only pays for their purchases in cash. Canadian shoppers have proven that they much prefer using their credit cards and debit cards to pay for their purchases. As a result, more and more Canadian merchants are making use of POS terminals that allow for such payment options. And it has been proven that doing so allows for their sales to increase and overall customer satisfaction to improve.
There are, however, those merchants who prefer to keep things a bit “old school”. They remain concerned about the idea that credit card issuers charge fees for the transactions that go through their terminals. And while there are fees associated with accepting credit cards, most Canadian merchants often regard them as being insignificant in the grand scheme of things. The benefits of accepting plastic far outweigh the costs, many have discovered.
But just a couple of months ago, some good news was revealed for Canadian merchants who are still concerned about credit card fees. According to Terry Pedwell of the Canadian Press, “Visa and Mastercard have agreed to reduce the fees they charge merchants for using credit cards to complete transactions.” Courtesy of FinancialPost.com, this news should come as a welcome change for business owners all across Canada.
Pedwell writes that according to Finance Minister Joe Oliver, there will be “an average effective card ‘swipe’ rate of 1.5% for the next five years.” The Finance Department reports that this reduction will amount to a 10% rate cut. So just how significant is this reduction in credit card fees? Dan Kelly, who is the president of the Canadian Federation of Independent Businesses believes that it is big enough to put smiles on the faces of business owners across the country.
“Small businesses will be pleased to see the first ever reduction in interchange rates in Canada,” he is quoted as saying, “As merchants have endured years of regular rate hikes, almost as important is the commitment to freeze the average interchange rate for the next five years.” Not everyone agrees, however. Senator Pierrette Ringuette has an entirely different point of view on the matter. She thinks that more can be done to cut fees.
Pedwell, on the other hand, seems to present a more optimistic view of the new cuts to fees being offered by Visa and MasterCard. “Under the proposals, all merchants can expect a reduction in credit card fees, but larger rate cuts are expected for small and medium-sized firms and charities,” he writes, “The credit card companies will also be subject to annual audits conducted by an independent third party.”
He goes on to note, however, that American Express isn’t joining Visa and MasterCard in offering any fee reductions as they sign fixed rate contracts with their clients. Pedwell goes on to note that credit card interchange fees are still higher than those charged by Interac for debit card transactions. “Under the proposals a merchant will pay an average $1.50 for each $100 in goods or services paid for with a credit card,” he reveals.
Apparently, the same transaction using a debit card would only result in a fee of 6 cents. It should be noted, however, that credit card sales do “carry more risk and offer more convenience.” One thing is for sure. Accepting both credit cards and debit cards has been proven to be beneficial for merchants of all types all over Canada. Call Canadian POS Corporation at 1-877-748-2884 today to learn more about accepting plastic using our POS terminals today!