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Visa/Mastercard surcharges being passed to customers


Seifer86

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34 minutes ago, aGENT said:

Same :lol:

 

But really, you telling me these greedy #$%@'s can't reduce/eliminate interchange fees? 

 

https://www.statista.com/statistics/580650/revenue-selected-banks-canada/#:~:text=Royal Bank of Canada (RBC,dollars in revenue in 2021.

 

 

This 100%.  Why are the CC companies passing on the cost of CC perks to the business that takes the CC payment?they are the ones with all the money!!

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4 minutes ago, TheOgRook said:

This 100%.  Why are the CC companies passing on the cost of CC perks to the business that takes the CC payment?they are the ones with all the money!!

How do you think they got it? :lol:

Edited by aGENT
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5 minutes ago, TheOgRook said:

In most businesses costs are passed onto the customer, I can tell you that most companies won’t even tell you about the increase or even offer you a discount for paying cash. Not all small business are making enough profit to absorb all costs associated with doing business. 

I'm fine with an increase in cost as long as it's applied equally.  

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3 hours ago, Warhippy said:

I will pay cash now.  For almost everything.  I will set up potential cash based layaway programs with local businesses I utilize.  With fees etc from this as well as duties from banks and electronic fees I am paying almost $7 per transaction for every $100 spent.  BEFORE taxes.  Just for using a gd visa/MC/Debit

 

Literally no excuses for this in a digital age where your information is handled in seconds without human hands ever being needed.  No overhead needed no salaries etc.

 

This is pure greed and will amount to just more of the cost passed to the consumer no matter what

This is incredible. I thought it was 4%. I really need to care more about the books.

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2 hours ago, TheOgRook said:

Hey Hip!  Long time no chat, I still avidly read but rarely log in these days. 
 

just to put some perspective on this.  As a small business owner, we have been forced to pay for all these “extra points” folks receive from their CC companies.  If by greed you mean the CC companies offering all these “incentives”. To their customer as the greed I totally agree.  Why should a small business have to foot the bill for the card companies offering perks?!?  That’s should fall on the financial institution looking to gain the extra customers. 
 

It might not seem like much but if a small business does 1 mil in business that is CC transactions.. that’s a lot of extra money to go towards the bottom line. Just my two cents :) 

So, I am a small business owner, I use square for my online transactions/payments and they've essentially rolled this together and I don't see much of a bump at all.  but it doesn't mean it doesn't cost my clients money.  for myself, my total fees per $100 being near or around $7 before taxes seems insane honestly.  With everything ebing automated, the idea that these fees should exist the way they do for the reasons they do and the amount they are seems usurious.

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2 hours ago, jatylo said:

I have no problem when asked to use my debit card at small mom and pop shops that don't have the supply chain like the major companies have. Most businesses already have the CC charge accounted for in their price analysis so it sounds like price gouging to me when inflation has already been up ~8%.

 

I think it may be time to date stamp an envelope paying for my expenses in dimes

Agree 100%. Under the previous contract, merchants were not allowed to charge a fee for CC transactions. However, that didn’t prevent them from pricing their goods/services to account for the charge. But that would be included in all purchases, including cash or debit. Now that the rule is reversed, they could reduce

prices equal to the fee and only include the charge on CC purchases. Would be interesting to see how many businesses go that route. 

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28 minutes ago, Western Red said:

This is incredible. I thought it was 4%. I really need to care more about the books.

So.  Your/my bank charges a fee for having the card.  they also charge a transaction fee.  Visa/MC also charges a fee as well for usage of their card, usually either through the bank or point of purchase.  The person you purchase from charges a transaction fee.  if you use a small business that utilizes something like square there is another transaction fee.  This is before taxes and of course your annual fee or monthly per card.

 

It adds up.

 

This is galling, and people don't think so.  but understand.  You can go to an RBC atm machine being a CIBC customer, knowing your information is out there and common knowledge to the banks and financial institutions and you'll be charged a $2 or $3 fee for using their machine.  Why?  What is the justification for that?

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1 minute ago, Warhippy said:

So.  Your/my bank charges a fee for having the card.  they also charge a transaction fee.  The person you purchase from charges a transaction fee.  if you use a small business that utilizes something like square there is another transaction fee.  This is before taxes and of course your annual fee or monthly per card.

 

It adds up.

OK, thanks for the response. 

 

I co-operate a small business on the island. We manufacture lumber. Are the fees you cite here automatic or are some of them optional? (I work with and for an older gentleman that understands none of this)

 

I'll have to look into what Square is. 

 

 

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6 minutes ago, Western Red said:

OK, thanks for the response. 

 

I co-operate a small business on the island. We manufacture lumber. Are the fees you cite here automatic or are some of them optional? (I work with and for an older gentleman that understands none of this)

 

I'll have to look into what Square is. 

 

 

Here's a good run through as a business owner

 

https://quickbooks.intuit.com/ca/resources/payments/the-real-cost-of-credit-card-processing-fees-and-rates-in-canada/

 

Spoiler

What Are Credit Card Fees?

Credit card fees are when a small business owner is charged fees whenever a customer uses their credit card to purchase a product or service from them. The process of charging a credit card has many components. There are multiple fees that are charged, some are fixed while others are charged each time a customer uses their credit card.

 

 

Types of Credit Card Fees to Watch Out For

There are a few credit card transaction fees to watch out for when running your business and taking care of the finances. The most common fees associated with credit card transactions, from the merchant’s side, include:

  1. Interchange fees
  2. Assessment fees
  3. Processor markup fees
  4. Terminal fees
  5. Payment gateway fees
  6. PCI fees
  7. Incidental fees

 

 

1. Interchange fees

Every time a customer uses their credit card at your place of business, a fee will be charged to your merchant account. This per transaction fee varies depending on the credit card company and which type of credit card your customer uses during the transaction. In addition, interchange fees change twice a year in April and October. 

Learn more about VISA and MasterCard’s interchange-plus pricing fees. Credit card companies don’t make any money from these fees; these fees are paid directly to the card-issuing bank.

Interchange rates and fees are there to help the card-issuing bank cover any risks associated with a purchase, including fraud, approving the sale, and handling costs. Some factors that influence the varying costs of this fee include:

  • the type of credit card being used (rewards cards, chip cards, business cards)
  • how the transaction is processed (POS vs. online)
  • the price of the product or service 
  • the type of business. 

On top of these varying factors, there are also separate interchange rates and fees associated with any international transactions.

 

2. Assessment fees

Sometimes referred to as card brand fees, assessment fees are small payments you make to the credit card brand. Depending on the credit card brand, this fee ranges from 0.07% to 0.09% of the transaction.

An assessment fee is not paid with every transaction but is based on your monthly sales. Like interchange fees, these fees change twice a year. Be sure that you are not double charged; some companies will combine your assessment fees with your markup fees. 

 

 

3. Processor markup fees

A processor markup fee is what you pay your credit card processor for the use of the product. This processing method fee is charged with each transaction and can be found in hidden fees and monthly fees. When choosing your payment processor, it is crucial to consider these costs as the processor company determines these fees.

 

 

4. Terminal fees

If you have a physical location for your small business, you will need a terminal to process payments. You can either purchase the terminals outright or lease from a company. 

Purchasing a terminal can be a hefty bill that you have to pay upfront. Leasing a terminal, on the other hand, means that you have to pay monthly terminal fees. Depending on your monthly expenses, it may save you money to purchase the terminal with a one-off payment.

 

 

5. Payment gateway fees

Payment gateway fees are associated with online stores. E-commerce business owners are charged a monthly fee and sometimes a per-item gateway fee. This fee connects your online shopping cart to your merchant account.

 

 

6. PCI fee

PCI fees are payments made to the Payment Card Industry, ensuring the security and fraud prevention of credit cards. These fees can be paid monthly or annually and range from $5 per month and up to $99 per year. It is the credit card processing service providers that charge you this PCI fee.

 

 

7. Incidental fees

These fees occur when something occurs on your end, like nonsufficient funds or transaction chargebacks and are only charged per occurrence. Sometimes these fees can be charged if you are below your minimum monthly payments or a faulty customer transaction.

 

 

Average Credit Card Processing Fees

Credit card processing fees and costs vary depending on which financial institution your merchant account is with, as well as which credit cards you accept at your small business. As stated earlier, credit card transaction fees also change twice a year, so be sure to always check with your advisor about the pricing model for your chosen bank.

 

Per transaction fees

  • Interchange fees: .005% – 2.5%
  • Processor markup fees: 1.43% – 3.5%

 

 

Monthly fees

  • Assessment fees: .08% – .10% (based on monthly transactions)
  • Terminal fees: $25 – $45
  • Payment gateway fees: $5 -$12 (+.05% – 2% transaction fee)
  • PCI fees: $5 – $10 (or up to $120 per year)

 

 

One-time fee

  • Activation fee: $0-$300

 

 

Is it Legal to Charge Customers for Credit Card Fees in Canada?

It is legal to charge customers a fee when using their credit cards. However, credit card companies like VISA, MasterCard, and American Express state in their merchant rules that you cannot charge customers a service fee. 

There are some caveats to this rule. Credit card services allow certain merchants to charge a service fee or convenience fee for particular transactions. This fee must be disclosed to your customers before the transaction is completed.

According to the Code of Conduct for the Credit and Debit Industry in Canada as a merchant, you can offer discounts for different payment methods.

 

Who is Involved in Credit Card Processing?

There are many companies and financial institutions that are involved in credit card processing. From the card issuer to merchant payment providers, all of these entities work simultaneously to provide a secure and convenient payment system for your customers.

  • Card issuers: This refers to the bank or credit union that issued the credit card to the customer.
  • Credit card networks: VISA, MasterCard, American Express, and other credit card companies are all part of a larger credit card network. They aid in transactions and also have a hand in deciding where their cards are accepted.
  • Merchants: This refers to you, the business owner. After all, your products and services are what make the credit card industry thrive.
  • Merchant service providers: Depending on what you want for your business, the merchant services provider can be a bank, an independent sales organization, or a cloud service provider like Square.
 

Merchant account provider vs. payment service provider

The difference between a merchant account provider and a payment service provider is usually a bank or other financial institution, whereas a payment service provider specializes in point of sale software.

Merchant account providers will set up a merchant account for you and will charge the fees associated with that type of account. A payment service provider is a third-party company that assists your small business in accepting online payment methods, like credit cards and direct e-transfers.

 

How to Reduce Credit Card Processing Fees

Credit card processing fees can add up, but there are many ways to mitigate some of these fees in the way you accept payments, negotiate with your merchant account provider, and more. Here is what you need to look out for when determining the pricing models of your chosen credit card processors. 

 

 

1. Promote debit or cash transactions with a discount

A lot of companies deter their customers from paying with their credit cards by offering a discount for purchasing products or services with cash or debit cards. Before you make this decision, it is important that you take a couple of things into consideration. First, you should research what the norm is for your industry. 

If you own a convenience store or a bakery, it is quite common to offer a discount for paying in cash because of the lower cost of your products. But if you are selling high-end products like luxury clothing or spa treatments, it wouldn’t be likely that your clientele would be paying in cash. There is also the time it takes to count the cash you receive as well as the time it takes to deposit it into your bank account.

 

 

2. Consider adding a credit card surcharge

The flip side of offering a discount for customers who pay in cash is to charge a surcharge for those who use their credit cards. This will make your customers think twice about using their credit card when purchasing a product or service from you. It will also deter your clients from making small purchases that could be less than the credit card processing fee.

 

3. Set a minimum for credit card payments

When accepting credit cards, you wouldn’t want someone to purchase a product that is less than your credit card processing fees. To make credit card usage worthwhile, it is a good idea to set a minimum amount for credit card transactions. 

Say you own a convenience store, and someone buys a pack of gum for $0.99, it is not worth the processing fees to allow this customer to purchase the pack of gum on a credit card. You can set your minimum to whatever dollar amount you like; it can range from $5 to $25.

 

 

4. Reduce your risks of chargebacks

Chargebacks happen when customers dispute a charge made by your business and ask the card issuer to reverse it. Chargeback fees can impact your credit processing fees because banks will consider your small business a higher risk. A good way to minimize chargebacks is to get your customers to sign a credit card authorization form, this will allow you to charge the card on an ongoing basis.

 

5. Negotiate your merchant account terms

When first setting up your merchant account, it is important to negotiate your payment processing fees with your bank of choice. They will often make adjustments to your fees upfront because once you have entered an agreement, you will have to wait for the contract to end. This means it is crucial to negotiate fees before you make a commitment.

 

Easily accept customer credit card payments when you use QuickBooks Online for your small business. Try it free today to receive the advantages of quicker and secure client payments.

 

Edited by Warhippy
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Just now, bishopshodan said:

The ease is my perk. 

I get that. I'm cheap, I like to squeeze out the perks. I don't travel nearly as much as pre-vid tho, so I may lean to cash/debit now since the math won't work for many rewards programs. Sure you get 1-2% "cash back" but if you're being charged that to use the card its a wash now.

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3 hours ago, Warhippy said:

Here's a good run through as a business owner

 

https://quickbooks.intuit.com/ca/resources/payments/the-real-cost-of-credit-card-processing-fees-and-rates-in-canada/

 

  Reveal hidden contents

What Are Credit Card Fees?

Credit card fees are when a small business owner is charged fees whenever a customer uses their credit card to purchase a product or service from them. The process of charging a credit card has many components. There are multiple fees that are charged, some are fixed while others are charged each time a customer uses their credit card.

 

 

Types of Credit Card Fees to Watch Out For

There are a few credit card transaction fees to watch out for when running your business and taking care of the finances. The most common fees associated with credit card transactions, from the merchant’s side, include:

  1. Interchange fees
  2. Assessment fees
  3. Processor markup fees
  4. Terminal fees
  5. Payment gateway fees
  6. PCI fees
  7. Incidental fees

 

 

1. Interchange fees

Every time a customer uses their credit card at your place of business, a fee will be charged to your merchant account. This per transaction fee varies depending on the credit card company and which type of credit card your customer uses during the transaction. In addition, interchange fees change twice a year in April and October. 

Learn more about VISA and MasterCard’s interchange-plus pricing fees. Credit card companies don’t make any money from these fees; these fees are paid directly to the card-issuing bank.

Interchange rates and fees are there to help the card-issuing bank cover any risks associated with a purchase, including fraud, approving the sale, and handling costs. Some factors that influence the varying costs of this fee include:

  • the type of credit card being used (rewards cards, chip cards, business cards)
  • how the transaction is processed (POS vs. online)
  • the price of the product or service 
  • the type of business. 

On top of these varying factors, there are also separate interchange rates and fees associated with any international transactions.

 

2. Assessment fees

Sometimes referred to as card brand fees, assessment fees are small payments you make to the credit card brand. Depending on the credit card brand, this fee ranges from 0.07% to 0.09% of the transaction.

An assessment fee is not paid with every transaction but is based on your monthly sales. Like interchange fees, these fees change twice a year. Be sure that you are not double charged; some companies will combine your assessment fees with your markup fees. 

 

 

3. Processor markup fees

A processor markup fee is what you pay your credit card processor for the use of the product. This processing method fee is charged with each transaction and can be found in hidden fees and monthly fees. When choosing your payment processor, it is crucial to consider these costs as the processor company determines these fees.

 

 

4. Terminal fees

If you have a physical location for your small business, you will need a terminal to process payments. You can either purchase the terminals outright or lease from a company. 

Purchasing a terminal can be a hefty bill that you have to pay upfront. Leasing a terminal, on the other hand, means that you have to pay monthly terminal fees. Depending on your monthly expenses, it may save you money to purchase the terminal with a one-off payment.

 

 

5. Payment gateway fees

Payment gateway fees are associated with online stores. E-commerce business owners are charged a monthly fee and sometimes a per-item gateway fee. This fee connects your online shopping cart to your merchant account.

 

 

6. PCI fee

PCI fees are payments made to the Payment Card Industry, ensuring the security and fraud prevention of credit cards. These fees can be paid monthly or annually and range from $5 per month and up to $99 per year. It is the credit card processing service providers that charge you this PCI fee.

 

 

7. Incidental fees

These fees occur when something occurs on your end, like nonsufficient funds or transaction chargebacks and are only charged per occurrence. Sometimes these fees can be charged if you are below your minimum monthly payments or a faulty customer transaction.

 

 

Average Credit Card Processing Fees

Credit card processing fees and costs vary depending on which financial institution your merchant account is with, as well as which credit cards you accept at your small business. As stated earlier, credit card transaction fees also change twice a year, so be sure to always check with your advisor about the pricing model for your chosen bank.

 

Per transaction fees

  • Interchange fees: .005% – 2.5%
  • Processor markup fees: 1.43% – 3.5%

 

 

Monthly fees

  • Assessment fees: .08% – .10% (based on monthly transactions)
  • Terminal fees: $25 – $45
  • Payment gateway fees: $5 -$12 (+.05% – 2% transaction fee)
  • PCI fees: $5 – $10 (or up to $120 per year)

 

 

One-time fee

  • Activation fee: $0-$300

 

 

Is it Legal to Charge Customers for Credit Card Fees in Canada?

It is legal to charge customers a fee when using their credit cards. However, credit card companies like VISA, MasterCard, and American Express state in their merchant rules that you cannot charge customers a service fee. 

There are some caveats to this rule. Credit card services allow certain merchants to charge a service fee or convenience fee for particular transactions. This fee must be disclosed to your customers before the transaction is completed.

According to the Code of Conduct for the Credit and Debit Industry in Canada as a merchant, you can offer discounts for different payment methods.

 

Who is Involved in Credit Card Processing?

There are many companies and financial institutions that are involved in credit card processing. From the card issuer to merchant payment providers, all of these entities work simultaneously to provide a secure and convenient payment system for your customers.

  • Card issuers: This refers to the bank or credit union that issued the credit card to the customer.
  • Credit card networks: VISA, MasterCard, American Express, and other credit card companies are all part of a larger credit card network. They aid in transactions and also have a hand in deciding where their cards are accepted.
  • Merchants: This refers to you, the business owner. After all, your products and services are what make the credit card industry thrive.
  • Merchant service providers: Depending on what you want for your business, the merchant services provider can be a bank, an independent sales organization, or a cloud service provider like Square.
 

Merchant account provider vs. payment service provider

The difference between a merchant account provider and a payment service provider is usually a bank or other financial institution, whereas a payment service provider specializes in point of sale software.

Merchant account providers will set up a merchant account for you and will charge the fees associated with that type of account. A payment service provider is a third-party company that assists your small business in accepting online payment methods, like credit cards and direct e-transfers.

 

How to Reduce Credit Card Processing Fees

Credit card processing fees can add up, but there are many ways to mitigate some of these fees in the way you accept payments, negotiate with your merchant account provider, and more. Here is what you need to look out for when determining the pricing models of your chosen credit card processors. 

 

 

1. Promote debit or cash transactions with a discount

A lot of companies deter their customers from paying with their credit cards by offering a discount for purchasing products or services with cash or debit cards. Before you make this decision, it is important that you take a couple of things into consideration. First, you should research what the norm is for your industry. 

If you own a convenience store or a bakery, it is quite common to offer a discount for paying in cash because of the lower cost of your products. But if you are selling high-end products like luxury clothing or spa treatments, it wouldn’t be likely that your clientele would be paying in cash. There is also the time it takes to count the cash you receive as well as the time it takes to deposit it into your bank account.

 

 

2. Consider adding a credit card surcharge

The flip side of offering a discount for customers who pay in cash is to charge a surcharge for those who use their credit cards. This will make your customers think twice about using their credit card when purchasing a product or service from you. It will also deter your clients from making small purchases that could be less than the credit card processing fee.

 

3. Set a minimum for credit card payments

When accepting credit cards, you wouldn’t want someone to purchase a product that is less than your credit card processing fees. To make credit card usage worthwhile, it is a good idea to set a minimum amount for credit card transactions. 

Say you own a convenience store, and someone buys a pack of gum for $0.99, it is not worth the processing fees to allow this customer to purchase the pack of gum on a credit card. You can set your minimum to whatever dollar amount you like; it can range from $5 to $25.

 

 

4. Reduce your risks of chargebacks

Chargebacks happen when customers dispute a charge made by your business and ask the card issuer to reverse it. Chargeback fees can impact your credit processing fees because banks will consider your small business a higher risk. A good way to minimize chargebacks is to get your customers to sign a credit card authorization form, this will allow you to charge the card on an ongoing basis.

 

5. Negotiate your merchant account terms

When first setting up your merchant account, it is important to negotiate your payment processing fees with your bank of choice. They will often make adjustments to your fees upfront because once you have entered an agreement, you will have to wait for the contract to end. This means it is crucial to negotiate fees before you make a commitment.

 

Easily accept customer credit card payments when you use QuickBooks Online for your small business. Try it free today to receive the advantages of quicker and secure client payments.

 

I wonder if this is at least part of the reason why credit cards aren't really (to my knowledge) in much use in Japan.  They're *still* quite a 'cash society' over there.  You'd think such a technologically advanced country would be close to 'cash-less'.  I seem to remember their banks even *CHARGED* negative interest on deposit savings.  Also seem to recall a number of their ATMs even have "office type" hours lol (eg., they aren't available for use 24/7).

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