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  • Frank Tian

💳 Canadian Card Surcharge: How Big?

Updated: Jan 28, 2023

Starting from Oct 6, Canadian merchants have the option to add credit card surcharges, with the typical exception in Quebec.

How big is the surcharge?

The cap is 2.4% of the transaction, or the cost of card acceptance, whichever is less.

🇦🇺 It seems Canada has leveraged the experience from Australia.

Australia allowed surcharges since 2003. However, there was no cap for the 13 years after. This led to some excessive surcharges as high as 8%.

In 2016, Australia mandated that the surcharge cannot exceed the actual cost of card acceptance. Merchants who charge need to track their actual cost for each payment scheme (Visa credit vs. Visa debit, etc.).

🟧 Merchant Reaction

Telus, one of the 3 major telecoms in Canada, first jumped the gun: it revealed the plan of a 1.5% surcharge of credit card payment in a regulatory filing.

According to a recent survey, 1 out of 5 Canadian small businesses is considering applying the surcharge.

“Considering” does not equal final action, though.

🟥 Consumer Reaction

From the reader's comments on CBC, the major public media in Canada, consumers strongly oppose the surcharge.

The argument: the current price should have factored in card acceptance cost. While charging credit card transactions more, would the non-card transactions see a price drop?

🟦 What will Happen Eventually?

After the dust settles, how many consumers will actually pay for the surcharge?

Let’s look at down under again. According to a 2016 survey, only 3.5% of card transactions ended up with a surcharge.

Surcharges were more often on the credit card: 4.7% vs 2.5% on the debit card.

People who held rewards cards were more likely to have paid a surcharge.

Sources: CBC, FCAC, RBA

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