How credit card surcharges might affect your next purchase

As of last Thursday, businesses in Canada can charge customers for using a credit card when they buy something, but don't expect to see a lot of signs about the surcharge popping up in local stores soon.

The change came out of a long-standing lawsuit businesses had with a couple of the major credit card companies. Businesses that want to apply the surcharge must disclose it before adding it, effectively giving the consumer the chance to avoid it by paying with cash or debit instead.

The extra charge is only to cover the costs businesses face because of credit card fees and is capped at 2.4 per cent.

Canadian Federation of Independent Business Atlantic vice-president Louis-Philippe Gauthier said these costs grow for the business as the benefits for the consumer increase.

"Everybody likes the point card and the cards that provide certain advantages, but realistically it comes with a price," said Gauthier.

"Now the businesses will be able to take that out of the pricing itself and just flip it to the consumer."

But despite that price, in a survey of 4,000 of its members CFIB found only 20 per cent expressed an interest in charging the fee, and most of those will be applying it in business-to-business transactions, where the size of purchases creates a bigger impact on the bottom line.

"At this point, at least, from our data, the usage is going to be not necessarily niche but relegated to certain areas or operations," said Gauthier.

Karl Littler, senior vice-president of public affairs at the Retail Council of Canada, is not surprised by the results of the CFIB survey.

"We've never seen it as a real solution to the problem," said Littler.

"What it's supposed to do is not necessarily surcharge people but persuade them to pay by means other than credit cards."

But retailers aren't keen to annoy customers by threatening higher prices if they want to earn points on their fancy credit cards, he said.

"Obviously, the life's blood of a retail environment is the customer desire to shop there, and customer loyalty, and good customer relations," said Littler.

"Putting a surcharge on the form of payment doesn't necessarily lead to the best of relationships."