High cost of credit cards

It’s not fun being a cash user these days.
Take for example the elimination of the lowly penny.  It’s an amazing thing but so seldom does the rounding work in favour of the customer!
But as in everything there are exceptions.  One Independent Grocer in Red Deer seems to take the stand that all rounding should work to the customer’s favour whether $0.4 cents or $0.1 cent.  It’s a refreshing experience to not always feel “had”.
But pennies aside, most disturbing for cash users is having to share in the excessive hidden fees that are attached to credit card privileges.  According to Dan Kelly, President of the Canadian Federation of Independent Businesses, their members pay a whopping $5-billion a year for the privilege of accepting credit cards, which in turn is built into the cost of all goods and services. Not surprisingly, Canadian and American merchants pay some of the highest credit card fees in the world, nearly twice as much as merchants in Europe, New Zealand and Australia.
There’s a good reason why major retailers, such as President’s Choice, Costco and department stores have their own credit cards . . .  but that is not an option for independent businesses . . . they have to play by the big boy rules!
Thirty months ago the Competition Bureau asked Canada’s Competition Tribunal to look into the anti-competitive behaviour of Visa Inc. and MasterCard Inc. They are still sitting on their decision . . . it’s David versus Goliath . . . independent businesses versus credit card giants.
The Bureau argues that Visa and MasterCard are being anti-competitive by preventing merchants from turning down high-cost “premium” credit cards, by not allowing merchants to charge customers extra when they use higher fee credit cards, or by not allowing merchants to give a break to those who use cash or debit cards.
Isn’t this the same argument government used when GST replaced hidden tariffs and duties — consumers should have the right to know the true cost of their purchases, including fees and taxes, so they can make the best decision possible?
Many countries in Europe and most American States allow merchants to apply surcharges to credit card users. Credit cards are a convenience and a service, but they have a high cost attached.  The argument boils down to who should bear the cost — those who use credit cards or everyone?
Like every good thing, merchants in Australia have chosen to take advantage of the consumer.  Many of their surcharges have become a new source of profit rather than a recovery of credit card fees.
But despite Australia’s bad example, in a free market economy it is the right decision to give merchants the ability to recover their credit card costs directly from the users if they choose.
Should the Tribunal, and hopefully they will, ever come to that decision there is a two-fold advantage to independent businesses and consumers, namely transparency and accountability.
First, consumers will be able to make a more informed decision on how to pay for a purchase.  And second, the onus will be on those corporations who directly serve customers to not gouge them.
Surely that is a far better system than hidden fees charged by third-party, giant multi-national credit card companies, and applied to everyone — users and non-users.
If the true credit card costs were charged to purchasers at point-of-sale, there would either be a resurgence in cash sales or an increase in debit card use since its transaction fees are much lower.
As it stands today, many people who use no-annual-fee credit cards and always pay off their balance each month think the service is free. And that is just so far from the truth!

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