Credit card fees are 'robbery actually'
Retail Couche-Tard part of coalition created to reduce credit card fees
Credit card fees today are taking such a big chunk from retail profit margins that the head of Couche-Tard, the company taking over Irving Blue Canoes and Big Stops, recently described the rising fees as robbery.
Alain Bouchard, head of Couche-Tard, told investors fees are getting so large they contributed to the company's "tough fiscal year" and were listed as issues in the company's year-end report.
"It's robbery actually. We are working to make consumers aware of the issue," he said during a teleconference following the recent release of fiscal year end results.
Couche-Tard is part of a retailer coalition called NACS, which was created to try to reduce credit card fees through political and legal avenues. The coalition is also behind an awareness campaign educating U.S. consumers about the role of credit card fees in rising gas prices.
In the U.S., a credit card fair fee act was recently introduced, which would give a government-appointed tribunal power to set credit and debit card interchange rates. This would limit the fees paid by retailers.
Many retailers in New Brunswick are struggling with high credit card fees, said Andreea Bourgeois, director of provincial affairs with Canadian Federation of Independent Businesses in New Brunswick.
"The fees are costing them too much. They operate on such small margins," she said.
Particularly hurting are gas merchants, she said, because credit card fees paid by retailers are a percentage of price. As gas prices rise so do credit card fees. But because gas merchants aren't selling higher volumes of gas, their profit margins do not rise. Instead, as costs increase - such as credit card fees - profit margins are squeezing some merchants so tightly they are cutting down on investments, not hiring summer students or going out of business entirely, she said.
Gas merchants who used to make five cents per litre of gas are not making two cents a litre, she said.
The worst culprits include the newer specialty credit cards being offered to consumers, which often come with higher retail fees, said Peter Woolford with the Retail Council of Canada.
"It's not that we object to paying a fee for the service. It's that the fee is no longer fair. As a customer you never see the fees," he said, pointing out credit cards hold 40 per cent of the total payment market.
Woolford pointed to the new Visa Infinite card, which has been issued to consumers with a combined family income of over $100,000. At 2.1 per cent of a purchase, its fees are higher than the 1.7 per cent charged by most other cards. Mastercard, Woolford said, has a policy now in which high-volume consumers are "redefined," increasing retail fees as a result.
The customer does pay for the fee, in the form of increased retail prices, Woolford said.
He said the government is aware of the issue, but there are no legislative initiatives similar to the U.S. credit card fair fee act.
"We're going to continue to work on this. But there isn't anything to say publicly at this point," he said.
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