It seems like a war has broken out at the cash register between merchants and credit card companies. With the support of the Competition Bureau, merchants are up in arms against Visa Canada Corp and MasterCard International Inc., as they are steeped in battle over the rising card fees that merchants are charged.
Merchants want consumers to weigh the pros and cons before using the card, and they are urging the Fed to act fast to rein in the fees that retailers are asked to pay to process the card transactions.
On Thursday, the Canadian Federation of Independent Business would launch a consumer campaign. This campaign would be launched early this year and shoppers would be encouraged to use debit or cash as that costs merchants much less by way of fees.
The federation will now place bold signs through 100,000 members at the cash registers, which would essentially ‘promote the benefits’ of opting to use other modes of payment.
Small businesses end up paying huge fees to the credit card companies as well as banks, and ‘most Canadians are blissfully unaware of that,’ states one of the prototype signs. Paying with Interac or cash helps in keeping the prices down for everyone.
The main aim is to create consumer awareness with regard to rising merchant fees that has become a hot-button issue this week, especially after the MasterCard and Visa was pulled up in a legal battle where Competition Bureau had urged that the anti-competitive practices should be struck down.
The most controversial recommendation made by the bureau is to allow merchants to add surcharge on the purchases made on the premium cards that carry a much higher merchant fee.
In the coming weeks, there is bound to be a lot of lobbying by the Federation to get Minister Jim Flaherty to bring in the voluntary code of conduct for the payment industry.
The CFIB will try to push and get Mr. Flaherty to allow retailers to add surcharges and permit them to refuse the high-cost premium cards.
Both MasterCard and Visa have control over 90% of the credit card market and are planning to fight the bureau. They also suggest that merchants must be upfront with the customers and keep them informed about the options available to bring down merchant fees. For example, clients who pay with debit, check, or cash can be offered discounts by merchants.