Small business owners welcomed a move in Tuesday’s federal budget to lower credit card transaction fees, but some industry officials say the move won’t really save consumers money. the money.
Ottawa said it has reached agreements with Visa and Mastercard to reduce these fees by up to 27% from their current average rates for more than 90% of businesses accepting credit cards.
The government calculates that this will save businesses $1 billion over five years.
Canadian Federation of Independent Business (CFIB) President Dan Kelly called it the “biggest win” in the federal budget.
“Credit card usage has just skyrocketed in recent years and as a result, businesses are being trapped for a greater portion of their sales,” Kelly pointed out.
“With margins being tight for small businesses, and costs increasing at almost every line of their budget, relief on this would be hugely beneficial. »
Rich Gowman is the owner and operator of Amplifiers Plus in Kitchener, Ontario, a business that repairs guitar and bass amplifiers. He had had to add, since the beginning of the year, a surcharge for transactions paid by credit card, in order to cover the transaction costs of his company.
His company was penalized an additional three to five percent on credit card transactions, depending on the card used, he said.
“It didn’t really hurt me, but it was still an expense that I had to absorb and write off as a business expense,” he said.
“If these fees are reduced, I may be able to reduce the surcharge I charge for credit cards.” »
But Kelly said some details are still missing about which small businesses will qualify for the cut, and when they can take advantage of it. It was also unclear how much each company could save, he said.
“We believe it will be a good deal, but there is still a long way to go, so hopefully we will have follow-up announcements,” he said.
“We don’t have a full picture of the exact nature of the rate reductions. Small businesses are really holding their breath, hoping to see progress […] soon to help them deal with rising costs. »
Ottawa said more details, including eligibility criteria for businesses, would be released in the coming weeks. The government has said it expects lower transaction fees for small businesses will not translate into higher fees for other businesses.
Visa and Mastercard did not immediately respond to a request for comment on the deal.
Meanwhile, the Retail Council of Canada (RCC) played down the significance of the ruling, saying households pay an average of $600 a year in credit card transaction fees and the announcement may not reduce this amount only $12 per year.
He estimated that the move would reduce credit card costs for consumers by up to 2%.
“The government has missed a great opportunity to save Canadian families money during these difficult times,” spokeswoman Michelle Wasylyshen said in a press release.
She called these potential savings “weak in every way.”
“Canadian families could have really benefited from some help to make their lives more affordable,” Wasylyshen argued.
Furthermore, the announcement was well received by the Canadian restaurant industry.
In a statement, Restaurants Canada, an association representing 30,000 members, said the deal was “a big win for our industry because it leaves more money in the hands of business owners” and added that it eagerly awaited more details to be shared.
The group also welcomed the reduction in the budget of the planned increase in federal alcohol excise duties. The tax will increase to 2.0% on April 1, rather than 6.3%, as originally planned.
The Canadian Microbreweries Association, for its part, said the reduction came “at a crucial time.”
“As the cost of everything that goes into Canadian craft beer production sees significant increases, this will relieve many small businesses across the country,” said President Blair Berdusco.