The sums that merchants will be able to claim following the settlement reached in the class action against Visa and Mastercard are “ridiculous”, says Michel Dépatie, owner of Marché Dépatie, in Laval, who worries about the survival of independent merchants. due to the exorbitant fees that credit card companies always charge on every transaction.
Posted at 7:00 a.m.
The one who also acts as chairman of the board of directors of the Association of Quebec Food Retailers (ADA) has been campaigning for years for the federal government to move the file forward. He asks that the interchange fees imposed on businesses by the Visas and Mastercards of this world, each time a customer pays his bill with his card, be reduced. The Liberals of Justin Trudeau had also committed to it during the last election campaign.
In 2021, Mr. Dépatie paid $250,000 in fees for a total of 300,000 transactions. By comparison, Interac payments cost him $10,000 for the same number of transactions.
According to the Canadian Federation of Independent Business (CFIB), merchants must pay between 1.5% and 4% of the total amount of the invoice (with taxes) each time a consumer pays for a transaction with his card.
Credit cards eat away at profit margins in a very, very, very big way. We work with very thin profit margins in food and that has a huge impact on the company’s profitability. It’s a big problem.
Michel Dépatie, owner of Marché Dépatie
Before the pandemic, in his supermarket, the rate of credit card use by customers was around 25%. It has now reached 35%. “If we end up with utilization rates of 75%, 80% or even 90%, that will be the end of independent trade,” he warns.
According to data revealed this week by the credit analysis firm Equifax Canada, credit card use is on the rise in the country. Monthly expenses related to this payment method increased by 17.5% in the first quarter of 2022 compared to the first quarter of 2021. In Canada, Ontario is experiencing the largest increase (20.4 %), followed by Quebec, which registered an increase of 18.4%.
“Compressed demand and increased travel following the easing of COVID-19 restrictions, combined with skyrocketing inflation, has resulted in one of the largest increases in credit card spending. story credit,” said Rebecca Oakes, vice president, advanced analytics, Equifax Canada in a statement.
Class action
Furthermore, following the settlement of the class action brought in 2001 against Visa and Mastercard, merchants who so request could receive a portion of the 131 million that must be paid by the two companies. They will thus be partially reimbursed for the fees charged by Visa and Mastercard each time a consumer uses their credit card to pay for a transaction. To be eligible for the refund, you must have operated a business between March 23, 2001 and September 2, 2021. Companies must also have paid interchange fees, explains Jasmin Guénette, vice-president of national affairs at the CFIB. He describes this decision as “good news”.
Small traders who have annual revenues of less than 5 million will be able to claim up to a maximum of $600 and for larger ones, this sum can go up to $5000. Companies have until September 30, 2022 to make their claim.
” It’s ridiculous. It’s nothing, ”drops Michel Dépatie, whose annual charges he must assume for credit cards far exceed the total amount of reimbursement. He still intends to file a complaint.
“Under this regulation, merchants will also be able to charge additional fees to customers who use privilege cards in provinces where this is permitted,” underlines Mr. Guénette.
Premium credit cards that allow users to accumulate points incur interchange fees that are much higher than other types of cards. From October, companies will therefore be able to claim an additional sum from customers who use them. Only Quebec will not allow this practice under a provision of the Consumer Protection Act preventing the merchant from overcharging, explains Jasmin Guénette.
“We want that to change,” he said. CFIB intends to lobby the provincial government on this issue.
For the owner of Marché Dépatie, the real battle concerns the fees applied to all credit cards, without distinction. Otherwise, he warns, “we will hit a wall”.