Most Canadians Would Stop Using Credit Cards at Businesses That Charge Additional Fees: Survey

A new survey suggests most Canadians would stop using credit cards at businesses that charge an additional processing fee for the service. Theethawat Bootmata/Shutterstock

Amid rising prices on everything from home heating and gas to food and other necessities, a new survey suggests most Canadians would stop using credit cards at businesses that charge an additional processing fee.

The non-profit Angus Reid Institute asked 2,774 credit card holders if a new credit card surcharge of 1.5 percent would change their buying habits. Of those polled, only one in 10 Canadians said they would continue using credit cards at businesses that charged the additional fee.

Fifty-nine percent said they would use cash or debit instead of a credit card, while 28 percent said they would shop elsewhere.

Starting on Oct. 6, businesses in Canada became legally allowed to charge an additional fee at the point of sale if a customer wishes to pay by credit card. The new rules come after a class action lawsuit settlement that required Visa and Mastercard to allow merchants to decide if they want to pass on the cost of accepting credit cards to their customers. The surcharge option is not available in Quebec due to consumer protection laws.

Merchants are required to tell customers they are charging the fee.

Shachi Kurl, president of The Angus Reid Institute, in an interview with Bloomberg, said the survey results “Speaks to some pretty unequivocal pushback in terms of what consumers are saying.”

Kurl said that she thinks the results of the survey will give credit card companies, banks associated with the cards, and major retailers “a moment for pause.” She said they should consider if they want to deal with “the noise, and the pushback, and the hassle that is going to come with really ticking off Canadians,” at a time when they are already “feeling the pain” of rising living costs.

Pay Cash or Debit

If a major retailer, airline, or phone company charged an extra 1.5 percent fee, 59 percent of those surveyed said they would use another form of payment, while 44 percent would stop patronizing that business.

Three out of ten polled also said a 1.5 percent surcharge would stop them from shopping at a small local business in their community. Only 13 percent said they would be willing to pay the fee.

Only 5 percent of Canadians polled said they did not have a credit card. More than two in five Canadians polled said they used their credit card “as much as possible.” The individuals polled who used their credit card most often were more likely to say they would go somewhere else instead of paying a surcharge.

The survey found that respondents with higher incomes were more likely to use credit cards. For example, 64 percent of those who indicated they had annual incomes of over $200,000 said they used credit cards “as much as possible.” Only 25 percent of those reporting less than $25,000 annual income responded similarly.

The higher-income respondents also had the most objections to being charged a processing fee by merchants: 73 percent said they would give up their rewards programs if they had to pay an extra 1.5 percent surcharge every time they purchased something with their credit card.