Credit card processing is a major component of the payments infrastructure for almost any small business. At least 89 percent of Canadian consumers carry credit cards, and spending on credit has increased by single-digit percent values since 2010. However, one of the biggest recurring financial obstacles that small businesses face is the continued obligation to pay credit card fees for processing and other services.
Now, even the largest businesses have now shown that they are fed up with the unfair fee structures imposed by credit card providers. None other than Walmart Canada has rolled out a plan to gradually stop accepting Visa credit card transactions, citing unreasonably high credit card fees.
Documents on Visa Canada’s website show that for standard retail purchases made in-store, credit card fees range from 1.42 to 2.08 per cent. However, the fee structure for credit card processing does scale with merchant size: a retailer of Walmart’s immense volume would likely qualify for lower than average rates, whereas small businesses may be stuck with less affordable processing options.
Accepting credit cards opens your business up to a massive market of credit users, but it is up to your business as to which provider to choose. Consider the price of lease of a point of sale system, and whether or not your processor is willing to offer online transaction portal setup to facilitate e-commerce. The fees associated with merchant processing are part of the fuel that incentivizes consumers to shop with credit, transformed into cardholder benefits or perks – but taking a bite out of the bottom lime of the businesses that these cardholders would otherwise frequent. Encouraging your customers to pay with cash and debit will help keep money in your till – and evidence suggests that it’s smarter for their personal finance and spending habits to use these methods, too.