CFIB urges action as consumers' growing taste for contactless and card-based payments weighs on independent enterprises
The pandemic-driven shift to digital payment methods and away from cash has added yet another item to the growing list of issues confronting Canadian small businesses.
In a recent survey performed by the Canadian Federation of Independent Business (CFIB), more than three-quarters (78%) of business owners believe credit card processing fees are too much for their business.
"The cost of doing business is at an all-time high, and small businesses are finding it more and more difficult to deal with accumulating credit card fees as consumers shift away from cash payments due to the growth of e-commerce and even for small, in-store purchases," according to Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB.
Throughout the pandemic, small businesses have adjusted the modes of payment they honour. Debit and credit cards are currently accepted by 92% of establishments. Another 55% of businesses have either begun to accept or increased their acceptance of contactless debit or credit payments.
A third of respondents (33%) said they’ve started to accept or increased their acceptance of online and e-commerce payment methods. Meanwhile, just over half (53%) of businesses have reduced or ceased accepting cash as payment.
CFIB president Dan Kelly added, "While credit card processing fees for some in-store transactions have come down in recent years, this has been more than offset by the massive growth in higher costs for e-commerce transactions and the shift away from cash during the pandemic."
Compounding the issue, small businesses are also less likely to have professional financial experts handling their affairs. Over half of firms (54%) have trouble understanding their payment processor's contract, and 41% are uncertain of their pricing plan. Processors are not required to use consistent language or show information in the same way, making it more difficult for merchants to interpret and compare statements or contracts.
The CFIB is pushing the federal government and the payments industry to assist small businesses by decreasing the average overall cost of credit card fees and ensure that small retailers receive similar pricing as larger merchants as pledged in the federal budget for 2021.
The government should also have different credit card processors use uniform wording and formats to simplify contracts and monthly statements, the CFIB said.
It also urged other measures, such as developing an independent dispute resolution method for merchants experiencing payment concerns and removing credit card processing costs on sales tax (HST/GST/PST).
"Consumer preferences are leading more businesses to adopt digital payment methods, but many of them come with significant processing fees. Some of these costs will inevitably be passed down to consumers, but businesses also worry about pricing themselves out of their markets,” Pohlmann said.
She called on the payment services industry and government “to do the right thing and address the unique needs of small businesses by finding ways to level the playing field and lower processing fees.”
