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Starting October 7th, Canadian businesses are able to pass on a new credit card surcharge to their customers. It is not clear however how many businesses will decide to adopt this new fee.
The surcharge option will allow merchants to pass on what is called interchange or swipe fee to the consumer. The fees can range between 1% to as high as 3% for some premium cards.
It follows a multimillion-dollar class-action settlement involving Visa and Mastercard that gave Canadian merchants the opportunity to recoup up to $5,000 in credit card processing fees.
Merchants that wish to add a surcharge for credit cards must advertise their surcharge policy and display it clearly on the receipts. Due to the consumer protection legislation in Quebec, the surcharge option won’t be offered in the province.
According to a CFIB research released this week, 19% of small businesses are considering using the surcharge to offset processing costs, and 26% said they will if their competitors do.
The survey also found that companies that cater to consumers were less inclined to pass on the surcharge out of concern for potential business losses whereas B2B companies are likely to impose it.
Things to keep in mind:
• Surcharge will be allowed on all credit products (debit and prepaid cards excluded)
• Surcharge will be allowed on all merchant category codes
• Surcharge will be allowed in card-present and card-not-present environments
• Surcharge will not be allowed if a convenience fee or service fee is applied
• Amount must be the lesser of the Effective Merchant Discount Rate or a maximum of 2.4%
• Must be appropriately disclosed at a point-of-entry, point-of-interaction, and on the cardholder receipt
• The total amount of the transaction submitted must be inclusive of the surcharge amount
• Will not be allowed in jurisdictions where surcharging is legally prohibited (QC)
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To learn more or if you have any questions, please contact one of our specialists at 1-877-773-1001
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