Small businesses agree with Walmart in credit card fee fight

Friday, June 17, 2016

CBC News

'It doesn't make sense ... to sell a product and to not make any money'

Small business owners in Windsor, Ont. say Walmart's dispute with Visa is only making public a fight they've been having for years with credit card companies over high fees.

Last weekend, Walmart announced it would be moving to stop accepting Visa at more than 400 Canadian locations due to "unacceptably high fees." Though it declined to break down the numbers, the retail giant says it pays more than $100 million in fees to companies like Visa, MasterCard and Discover for processing sales transactions.

That's a situation Terry Yaldo sees at his business too. Yaldo owns the Midway Convenience store and sits on the board of the Ontario Convenience Stores' Association. He says Visa fees for his store can be as high as five per cent.

"We might only be making 25 to 50 cents. It doesn't make sense on a business standpoint to sell a product and to not make any money," Yaldo told CBC News.

For a typical transaction costing $10, that means the convenience stores are paying 50-cents to the credit card company.  

Yaldo said it's even worse for independent gas stations, where people spend more and are more likely to use a credit card to fill up.

At the Petro Line gas station on Wyandotte Street, the manager reports sending $1,400 each month in fees to credit card companies.

Retail council weighs in

Across the country, retailers are watching the dispute between Walmart and Visa closely. The Retail Council of Canada says high credit card fees are unacceptable to retailers and some are thinking of following Walmart's lead.

"I don't think we'll see the floodgates open [but] we understand the frustrations across the entire retail market," said Karl Littler, the group's vice-president of public affairs.

In Windsor, most retailers who spoke with CBC News said they're afraid of losing business by cutting out credit card sales. The most successful businesses to go to a cash-only model are barbershops and hairdressers. 

"They'll go to the bank and they'll come right back. I think it's the service and what we offer, that they like to come back," said Mardin Lopez who has an ATM in his barbershop and a bank nearby.

The retail council, which represents businesses small and large, is calling on the federal government to intervene to mandate lower credit card fees for all merchants. It wants to see credit card fees brought into line with Europe and Australia.