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Businesses can now charge customers for credit card processing fees

By Evan Taylor Oct 5, 2022 | 2:19 PM

Avery Evans / Unsplash

Effective Thursday businesses in Canada will be able to pass on credit card processing fees directly to their customers.

They have been given the authority to do so as a result of a class action lawsuit against Visa and Mastercard  that ruled they were unfairly forcing businesses to accept all types of cards including premium ones with rewards programs, that have higher processing fees ranging from 2-3 per cent.

Prior to the change businesses were forced to cover the cost of credit card transactions themselves but this new authority gives them the freedom to decide whether or not to directly charge customers who use credit cards.

Under the new regulations, businesses can add a surcharge to transactions paid by credit cards as long as it does not exceed the cost of the processing fee being charged by the credit card company. Surcharges also must be clearly indicated on any receipts so customers are aware they are being charged.

Telus is the first major Canadian company to announce it will be adding a 1.5 per cent surcharge for all transactions paid by credit cards.

It remains unclear how many other businesses will be following suit, however, a recent survey by the Canadian Federation for Independent Business indicated that 19 per cent of merchants intend to use the new power to surcharge, while a further 26 per cent said they will do it if their competitors or suppliers do.

“This data reveals the frustration so many business owners feel about the high cost of credit card processing, which can eat about 1.5 to 2.5% of every sale,” said CFIB president Dan Kelly.

Businesses can now apply to surcharge by registering their plans with their credit card processor and Mastercard (Visa requires registration with the processor only). Once they have registered their intent to surcharge, merchants must then wait 30 days before they can start to apply a surcharge on Visa and Mastercard transactions.

Businesses in Quebec are not allowed to as surcharges for credit card fees under the new regulations due to consumer protection laws exclusive to that province.







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