Hugh: Starting Tomorrow, Canadian Businesses Can Charge You an Extra Fee for Paying With a Credit Card

If you’re the type of person who puts all their purchases on a credit card for the rewards points, you may want to reconsider that move going forward. As the result of a major class action lawsuit settlement, Canadian businesses will now be able to charge customers an extra fee for credit card payments. As you may or may not know, retailers pay processing fees to credit card companies for every transaction. Starting October 6th, those retailers will now have the option to pass on the cost of accepting those payments directly to the customer. Which businesses will charge the fee and how much it will be is on a case-by-case basis, but some companies like Telus have already announced their intentions for new credit card processing fees. Apparently, transaction fees often range from one to three percent of the purchase cost, depending on the card.

So how often are you likely to come across these new surcharges? Of course that remains to be seen, but according to one recent poll, 19% of small businesses are considering passing off processing fees to customers, while 15% say they’re against it, which means most are undecided. The same poll found that companies who sell to other businesses are more likely to adopt the surcharge, while businesses that cater to consumers are less likely. You also won’t see the new fee in Quebec, where an exemption is in place.

If you’re thinking back on times where you have seen an extra charge at a payment terminal for using one of your cards, apparently that situation falls into a different category. Businesses haven’t been allowed to pass off credit card processing fees directly to the customer until October 6th, but were able to charge a convenience fee for payment options that usually aren’t available. Those convenience fees are distinguished by showing up before payment is processed, allowing customers to either agree to the charge or choose another payment method. It’s not yet clear at what point the new surcharge will appear.