Credit card users will avoid major retailers — but not necessarily small business — that apply the 1.5% surcharge, poll finds

Two of every five credit card holders say they would stop shopping at major retailers if they were hit with the 1.5 per cent credit card processing fee, a new Angus Reid poll suggests.

However, only three out of 10 would do the same at small businesses that pass on the surcharge.

The survey results may not be surprising as it comes at a time when interest rates are climbing, inflation is soaring, and the cost of living is getting more expensive.

You are seeing ... very strong push back from credit card users," said Shachi Kurl, president of Angus Reid. Canadians are saying Hell no' this is not something they're interested in absorbing at all," Kurl said.

The new surcharge follows the settlement of a class-action lawsuit between Canadian businesses and payment-processing corporations Visa and Mastercard. The two companies agreed to allow Canadian merchants to apply an extra fee at the checkout for the use of their credit cards. That change went into effect in October.

The average interchange fee in Canada - the amount a business has to pay to process a customers credit card - is 1.4 per cent, but it can reach up to 2.4 per cent depending on the type of credit card, loyalty program, premium amount, and the retailer at which it is used.

Ninety-five per cent of adult Canadians have credit cards.

According to the poll - an online survey of 2,774 Canadian adult Angus Reid Forum members conducted Nov. 28 to 30 - 44 per cent of credit card holders (more than two-in-five) will not be shopping at big retailers that add the processing surcharge of 1.5 per cent.

Ten per cent said they would absorb the cost if the business were a major national or international retailer, while fewer than half said they would use cash or debit card.

It's a different scenario for small businesses with only three-in-10 credit card holders - 28 per cent of respondents - saying they would not shop at a small business if the surcharge was added. More than one-in-10 (13 per cent) said they would absorb a 1.5 per cent fee, while three-in-five (59 per cent) would use another form of payment.

Retailers have already started adding the surcharge at the point of purchase, noted the Angus Reid report.

Karl Littler, senior vice-president of public affairs at the Retail Council of Canada, said while its members can now add the surcharge, most have no inclination of doing so.

Nobody wants that kind of this friction with their customer the final moment when they're making a purchase," he told the Star. Merchants obviously are very sensitive about adding a cost to consumer bills' given the high inflation.

Our merchants' view is the government needs to fix this by lowering interchange upstream, not by having merchants charge a surcharge downstream to their customers," he added.

The only RCC member that may add the surcharge is Telus, said Littler, but they are not planning on charging it on retail." The national telecommunications company indicated it is contemplating charging it on telecom bills and such but not on phone sales, Littler said.

The surcharge threatens credit card loyalty programs, which are used by 82 per cent of card holders.

There is palpable concern that this increased fee may reduce or altogether mitigate that benefit," the report said.

Sixty-one per cent of those surveyed said a surcharge of 1.5 per cent will stop them from using their credit cards. Only 16 per cent said they will still shop with their credit card despite the new fees.

Canadians love their points cards," said Kurl. The minute you have people being encouraged to use their credit cards to collect and accumulate those points and then they see basically that benefit being washed out by a 1.5 per cent surcharge, well, that's it. That could be the death knell for these loyalty cards," Kurl said.

These data would certainly indicate that retailers probably have a reason to think twice before they consider such a move," she said.