Hamilton businesses opt not to charge credit card swipe fee

In Hamilton, some small businesses are unsure about passing their credit card processing fees on to their customers.

As of Oct. 6, businesses across the country can charge customers using credit cards an additional fee to offset merchant costs. This comes after the settlement of a long-standing class-action lawsuit with Visa and MasterCard earlier this year.

But small businesses in Hamilton that are already struggling with thin profit margins amid COVID-19 recovery and high inflation worry the additional charge will drive away their customers.

Ashraf Abu Shakra, manager of the Mediterranean grocery store Al Sham Market on Fennell Avenue East, said he doesn't want to lose customers by passing on the surcharge for credit cards.

He said the demand for international groceries at his store has been low amid high inflation and people are buying essentials only." This, combined with a potential additional charge for using a credit card, would hurt his business, Abu Shakra said.

Although the credit card transaction fees and inflation are affecting our (profit) margins, we try to make it up from something else, maybe offers or specials," Abu Shakra said.

About two in five small businesses are not sure if they will pass on the surcharge, while one in five small businesses are considering the option, according to a recent survey by the Canadian Federation of Independent Business (CFIB).

Another 26 per cent of businesses said they will see what their competitors are doing, and 15 per cent of businesses determined they won't charge extra for credit cards.

Ryan Mallough, vice-president of legislative affairs in Ontario with CFIB, told The Spectator a business' decision to pass on credit card fees to customers is emblematic of the situation out there right now" which is still very precarious."

Pandemic recovery is a ways away" for businesses across Canada, with the average debt level for a small business in the country at $130,000, Mallough said.

On the consumer side, everyone is feeling that pinch on the pocket (due to inflation). So, publicly adding costs is not really in the cards for a lot of small businesses."

In response to high credit card fees, businesses are also encouraging customers to pay by debit or cash.

Mallough thinks this move could eventually push credit card companies to lower or standardize the credit card fees like in Australia. Canada is among the countries with the highest credit card fees, with an average surcharge of 1.4 per cent. The reason why it's high is not known.

Business-to-business organizations, meanwhile, may lean toward charging their clients a fee for credit card use, Mallough said.

But not in the case of Wellington Street-based Minuteman Press. Justin Bester, owner of the company that prints cards and posters for Hamilton businesses, said he will continue to take on the cost of credit card fees and treat it as an operational expense.

It's not fair to the consumer. It's our charge. It's not the consumers' charge," he said.

Ritika Dubey is a reporter at The Spectator. rdubey@thespec.com