Premium Credit Cards Cost Canadian Retailers

By Janet Hutchins on Oct 7, 2011 | Filed in News

Premium credit cards are great for consumers, especially those who like to reap the rewards the premium cards offer. However, small businesses, especially independent retailers, are starting to feeling the pinch. Credit card companies charge merchants for accepting their cards, and have been increasing the associated fees in recent years.

Why Small, Independent Retailers Have a Problem

For the biggest retailers, these added fees for premium card use aren’t such a big deal. After all, they can absorb the cost a little easier. Independent retailers, though, have a tougher time with the increased fees. It’s a Catch-22. If independent retailers raise prices on customers to help pay the fees, they will likely lose business since their products are no longer as competitive. However, their profit margins are eroded by the higher fees charged on premium credit cards.

In order to help make consumers aware of what’s happening, the CFIB has been running an educational campaign. This campaign includes providing signs for small businesses to post in their establishments, encouraging customers to use cash or debit to make purchases. The businesses still accept premium credit cards, of course, but they are hoping that when consumers understand the situation, they will choose to use an alternative means of payment.

Would You Give Up a Few Reward Points to Help Small Businesses?

Of course, what you decide to do is entirely up to you. But would consider forgoing a few reward points in order to help small businesses? It seems as though there is an increasing war between big banks and the little guy — whether that little guy is an independent retailer or an individual. Some think that individuals should show solidarity with small businesses, hopefully showing enough disapproval of bank practices that things will change.

What do you think? Would you use something other than a premium credit card to help small businesses?

2 thoughts on “Premium Credit Cards Cost Canadian Retailers

  1. Alex_Wan

    Hi Janet,

    Coll article – I really like the topic you are discussing here!

    But I think one problem for me in deciding not to use the credit card would be loosing a purchase security or warranty extension service, that I usually get with my credit card (its included in almost all credit cards today). Obviously if you pay with your debit card or cash, you are not protected…

    Wanted to share a helpful link – You can check here if your existing card offers these features: https://insureye.com/insurance_toolkit

    Also buying online with debit card or cash is an issue…

  2. JL

    This is a tough one for me. While I want to help out small business I also need to help myself. It seems like everyone wants a little more these days. From the plumber to the Hydro company. As much as I would like to help everyone, my rewards cards helps me by giving me around $400 a year. The “little man” is small business, but the even littler man is me the individual. It’s seems we forget that. Alex also make a god point about the purchase security and warranty extension service. These are two benefits that “I pay for”, and thus like to use. Without the “littler guy” the little guy doesn’t have a chance.

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