Many small business owners offer customers a variety of options when it comes to making payments. This can influence more transactions if consumers know they can complete purchases in their preferred way, from credit card processing to cash only. Though investing in payment processing gateways can be initially expensive, the effort usually pays dividends.
However, company leaders in Canada may soon find that offering certain modes of payment is no longer worth the expenses that accompany transactions. Entrepreneurs will have to provide for extra fees for every MasterCard transaction within their accounting software and decide if it's beneficial for the company to continue to process this type of credit card.MasterCard increases charges
Leaders at MasterCard Canada recently revealed that the fees that accompany transactions at small firms are set to increase in July. This comes not long after Visa took the same action, though their costs are now notably higher than those of MasterCard. As of July 1, startups will see these charges increase by 20 percent
when the assessment fee rises to 7.7 basis points from 6.4.
"The Canadian Federation of Independent Business (CFIB) is very disappointed that MasterCard is choosing to increase its fees at a time when small firms are struggling with an uncertain economy," CFIB president and CEO Dan Kelly said. "Small business owners are calling on MasterCard to reconsider its plans to hit them with higher fees when many entrepreneurs simply can't afford to pay more."Implications for the future
Interestingly, this change in fees comes not long before the Competition Tribunal, which will rule on the potential addition of surcharges to credit card companies by merchants who allow customers to pay with their cards and the possibility for outright refusal to accept cards based solely on high fees.
The case could turn out like the situation in the United States, The Canadian Press reported. The news outlet detailed that in the summer of 2012, Visa, MasterCard and a number of large banks reached a settlement with small business owners, paying merchants $6 billion
after being accused of price fixing. Should the court rule in favor of Canadian startups, owners would have more discretion on payment options.
The CFIB released a statement suggesting that if Canadian companies cannot afford to contend with the new fees levied by the two credit corporations, they should consider reverting to a cash only system, making debit the sole type of plastic allowed or using Interac's mobile payment platform.