Visa hits small business with higher fees, new "uber-premium" card
The Canadian Federation of Independent Business (CFIB) expressed its strong concern with recent plans by Visa Canada to increase several costs for Canadian merchants. Small businesses - still struggling to deal with huge increases in credit card processing fees following the launch of premium credit cards during the recession - are soon to be hit by another round of fee hikes, additional charges and a new even higher cost "uber-premium" card.
"At a time when small businesses are struggling in an uncertain economy, Visa is about to implement a one-third increase in its slice of the fees small firms pay to process credit card transactions," said CFIB president and CEO Dan Kelly. "In addition, small Canadian hotels, restaurants and retailers will see a dramatic increase in their costs of accepting foreign-issued cards."
Visa Canada plans to:
Increase its fees to card processors from 6 to 8 basis points - a full one-third increase. These fees are passed on to merchants - sometimes at a mark up - and are known as "assessment" fees. These fees will rise in April 2013 and are expected to affect all Canadian merchant Visa transactions;
Increase the cost of foreign card transactions by 40 basis points, potentially doubling the existing fee - also effective in April 2013; and
Introduce a new "uber-premium" card for top spenders. Banks will be able to issue the cards in the fall of 2013. These cards will carry significantly higher fees for merchants than the already expensive premium Visa Infinite brand.
"Unfortunately, Visa appears to have ignored the huge negative impact premium credit cards had on small merchants across Canada," Kelly added. "Visa's timing couldn't be worse as government opens up the Code of Conduct to consider mobile credit card payments and mobile wallets. In addition, the Competition Tribunal ruling on unfair credit card practices is expected to be delivered in the weeks ahead."
CFIB reminds consumers that paying with Interac debit or cash is one small way they can help small businesses. In addition, merchants can find special signage to promote paying with Interac or cash at www.cfib.ca/debitcredit.
"CFIB will continue its work as the watchdog of the credit card industry in Canada and press for further changes to the Code of Conduct to help merchants push back against unfair fees and practices," said Kelly. "Small business owners are calling on Visa to reconsider its plans to hit them with higher fees when many entrepreneurs simply can't afford to pay more."
As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.