Higher Rates? Why?

In this tough economy every penny counts, so it is upsetting to most that Credit Card Processors operating in Canada have and are making changes that increase your costs of processing credit cards.

There are a lot of issues in the debate that need to be understood.  First, business owners/merchants need to see the value of being able to process credit cards.

Understand that merchants are extended short term credit by the Credit Card Processor that processes their business for the products that their customers just left with.  That customer either doesn’t have the money on hand to pay, or wanted some type of reward incentives/ points/ percentage cashback that goes along with spending that money anyways.  Because of our culture of consumerism, spending and instant gratification resulting in our present economic reality- credit card acceptance makes a HUGE difference in larger average sale amounts, impulse buying, convenience and ultimately, a business’ volume compared to not accepting cards.

When a customer buys your product/ services on a credit card.  You get your money from your Processor within 2 bus days, but the Processor doesn’t get their money from your Customer’s Card Issuer right away.    Your Processing company is not the same company as your Customer’s Card Company.  Think of what this means to them if you are selling $2500 furniture sets.  So first off, I don’t think any sane business person would want to be in the shoes of a Processor because of the upfront capital needed and the potential risk.

On the other hand and secondly, greed seems to be the standard in some large companies that are far removed from their customer base.  When customers number in the hundreds of thousands, then they become just that… numbers that contribute to the bottom line.

Although I agree that “Many retailers see themselves as the little guys without much clout when dealing with sophisticated multinational firms with revenues in the billions and a virtual lock on the market.”

The suggested answer: ” like nearly two dozen other countries that have begun to initiate reviews or take action on credit-card rates and practices, it’s time for Canada to do so.” is not going to solve the problem.

Third: Turning to the Canadian Government is NOT the solution.  They always patch one problem and create another.  If that new department created and paid very well to do that patch job fails, they will not disband that department.  They do not run lean and efficient like your businesses.  Let’s say they legislate rate freezes against the six major credit card processors in Canada.  Problem solved?  NO, they cannot regulate EVERY TYPE of FEE or Service.  If you reduce one area, then the next area will get beefed up to make up for the loss.

Fourth and in conclusion: We need to work together utilising the power of the internet to communicate to the mass of entrepreneurs and would be entrepreneurs in our country.  We can educate and warn each other.  We need to share our experiences- good or bad.  Put up hundreds of Blogs and Review Sites on Canadian Processors and the corresponding Point of Sale/ Payment Solutions/ Payment Processing companies that use them.

If we cannot persuade with reason and pleas of fairness, then in the end we can only vote with our dollars.  If it pays to be ethical because a few Processors are losing THOUSANDS of customers each month to their competitors, then they will change.  Look at the environmental movement and what companies do these days to get consumers to buy their eco-friendly products.


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