Alternative approaches to controlling credit card processing costs:
Both the City of Prince Albert, and the City of Moose Jaw have taken alternative approaches to reduce the cost of processing credit card transactions.
The City of Prince Albert does not accept credit cards for any payments (including property tax, utilities, and fees) apart from at recreational facilities, while the City of Moose Jaw only permits the use of credit cards through a ‘user pay’ third party processor.
There are obvious benefits to accepting credit card payments. However, the significant expense highlights the need for efforts to minimize costs.
Small businesses are well aware of the costs of accepting credit cards. Most scrutinize various credit card processing options to find the lowest fees.
In fact, those rising costs led CFIB to negotiate and offer discounted rates to its 95,000 small business members across Canada. Most recently, the CFIB reached an agreement directly with Mastercard, which allows CFIB members to get the same rate as individual merchants with over $3 billion in Mastercard sales. This is an industry first and goes into effect starting April 3rd, 2017.
A similar opportunity exists for municipal governments to work together to also reduce the rising cost of credit card processing fees.
To ensure municipalities are minimizing the costs of credit card transaction fees, CFIB has the following recommendations:
- Educate taxpayers about the impact of credit card fees on municipal operating costs and encourage debit payments at point of sale;
- Conduct regular reviews about which credit card payment processing companies offer the best rates;
- Track and regularly report data on the number of transactions, transaction fees, rates and type of credit card used (i.e. premium versus regular); and
- For municipalities which do not currently do so, tender the service provision out to credit card processing companies to obtain the lowest offered rates.