Image Source: Steve Buissinne from Pixabay
Last week, Canadian businesses got the green light to pass on a surcharge of up to 2.4% to its customers who use a credit card to purchase goods and services. This is to offset the 'interchange' rates to merchants charged by the credit card company for processing purchase transactions.
Businesses must give consumers 30-days’ notice prior to implementing the surcharge. They also must inform consumers, before the purchase transaction, that a surcharge of XX amount will be levied. According to Canadian Federation of Independent Business (CFIB), forty percent of businesses say, they plan to levy the surcharge.
In a nutshell this means credit cardholders (consumers) will be paying business owners (merchants) to lower their ‘cost of doing business’ expenses. The cost of doing business are expenses a business incurs for producing and selling goods and services for profit.
Additionally, if you are paying an annual fee to use your credit card, basically you will be paying twice to use the same card.
What’s this going to mean for e-commerce businesses and the people employed by them?? Where the only way you can pay is with a credit card. And…what’s the impact going to be on rewards programmes?? I can hear parents telling their 4-year olds…sorry honey we can’t take that trip to Disney World.
Today, inflation is high, food and fuel prices are higher than they’ve been in decades and affordable housing is extinct in this country. A credit card surcharge is going to put another squeeze on existing consumers’ tight budgets. How much of a squeeze?? Let’s say you’re a family of 4 and you use your credit card, at the grocery store, to collect points to take that trip to Disney World. You’re monthly grocery bill is $800 @ 2.4% that works out to an additional $19.20. Annually that’s $230.40. Your groceries now cost you $1030.40.
The bottom line is a business expense should not be passed on to and paid by consumers. It's an excellent example of using the wrong mindset where the outcome is too narrow resulting in financial benefits, for one group, at the expense of an already stretched group.
It's true capitalism is about driving profits. But, at what cost?? Are we at a point where making money is the only outcome that matters??
Our Unlearning Lab is about looking for what's not there yet to help and serve people and planet first then profit. It's about being socially conscious and responsible. We're working on a few Unlearning Labs that we're going to share with you first here so, stay tuned.