Avoiding Credit Card Transaction Fees For Potential Savings
Financial Management

Avoiding Credit Card Transaction Fees For Potential Savings

While going to the Global BC studio today I was told that apparently this is the last week for the AM/BC show. Apparently they are moving to an evening time slot with a different show format. So this was the last episode for me for their morning show.

The topic revolved around that news bit on how merchants were trying to say that the transaction fees incurred from customers who use premium credit cards is way too much and unfair. I kind of expressed my thoughts abut this in an earlier post. But in general I thought it would be interesting to educate people on how much companies lose and what this means for you. For example, here you can see the direct fees that a company like Visa and Mastercard charges:

http://www.visa.ca/en/aboutcan/mediacentre/interchange/pdf/visa-interchange-rates-current.pdf

http://www.mastercard.com/ca/wce/PDF/MasterCard_Canada_Interchange_Rate_Programs.pdf

Now from what I gather a lot of merchants are saying we should care too as these fees ultimately mean that they have to raise prices. At the same time, I know a lot of people say that is baloney as regardless of the credit card fees a lot of the big stores will continue to charge people high prices. So as kind of a way to get you thinking I used this example of me shopping for some kale. Look at these two prices here where one is from large supermarket and one is from a smaller store:

If you look at these prices it is pretty significant where the larger store that offers the convenience of having credit card payments is charging $1.47 for each whereas the smaller store that doesn’t have credit card options is charging 39 cents each. While obviously the company has to mark up its prices to adapt to business expenses like these, does it really make this much of a difference?

I am pretty sure most people would say no and this is why most people have no real sympathy for large businesses in regards to them having to pay these fees. I even read comments as far as people saying if they decide to not offer the convenience of a credit card then they will simply take their business elsewhere.

For me in a consumer point of view it’s more about the little guy. For example, that mom and pop show that is selling tea or coffee. You can even extend this to like a small electronic store that sells items like TV’s. I know that them being a smaller business means they are having a tougher time competing with the bigger guys. So like in the above example, if I know they are trying very hard to provide a good product or service where the price is extremely cheaper then I would avoid using the cards as I want their business to grow more. In the end it puts money in their pocket and everyone saves more if they stay afloat.

As well, in knowing these fees you can often use it to bargain with larger stores too. For example, if you are making a purchase worth $5000+ you will be surprised at how many businesses will agree to drop the price solely because you offer to pay in cash. That is a significant amount too so it gives you a lot of room to haggle the price. Bottom line, even understanding business expenses like these can help you find and negotiate the best deals.

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