Like It or Not, Credit Card Companies Create Sales That Otherwise Wouldn’t Exist for Retailers; raising prices could have CONSEQUENCES: What you need to know about the new Canadian credit card surcharge – October 10, 2022,
Capitalism revolves around a race to the BOTTOM; I like to point out that without INNOVATION, Capitalism is inherently DEFLATIONARY. I argue that the entire purpose of a central bank and fiat money is to prevent DEFLATION. So for myself, when I heard about a ruling that Canadian retailers can now charge their own customers who pay with a credit card an additional fee, I said to myself hmmm, I wonder how this will turn out.
I could be wrong, but in my mind, I imagine a RACE TO THE BOTTOM scenario now that this credit card fee can be passed onto consumers because for some consumers, myself included, I’m not paying from your store if I can’t use my credit card, I use my credit card with INTENTION to collect points. There are instances now that I have to pay a fee when using my credit card because the government gave certain companies a monopoly over an entire industry, so I have no other option but to pay the credit card fee, but if let’s say I’m going to shop at a retailer that doesn’t have a monopoly? Well, if the option is there to avoid shopping at a retailer that charges a credit card fee, I won’t shop at that retailer.
Now, I actually agree with the ruling, my only problem with the ruling is I wonder if there were price controls PRIOR to the ruling because I would have assumed the retailer would have been charging higher prices to EVERYONE because of the credit card fees, so if prices don’t come down for cash only shoppers, all of this is going to make retailers charging the credit card fee look very bad.
Furthermore, if I’m a retailer, I might add the credit card fee and then remove it, to undercut my competition, and I might even promote that my company will NEVER charge a credit card fee, just to take market share from my competition. Now, maybe I’m looking at this all wrong, but the beauty of capitalism is the underhanded tactics a seller can use to take customers away from their competition.
I can imagine maybe in the first year, retailers will be happy to start charging these fees, but a lot of the people keeping the economy running, pay using their credit cards, and if they feel like they’re being disrespected, they’re not going to take their frustrations out on the credit card companies, they’re going to take it out on the retailers.
Now, there are certain segments of retail that I think will get away with the additional credit card charge, potentially airlines, and other high tickets heavily regulated industries, but the industries that don’t have a lot of regulations and are therefore in very competitive environments, will likely feel the wrath of the consumers if they impose a tariff on the credit card paying customers.
Either way, this is something I will be paying close attention to because, quite frankly, I’m not sure what will happen, I expect retailers to get aggressive with the fees early on, but I also expect some to drop the fees once consumers react to it. Because if the fee is so high that retailers are making a stank about it, I’d assume that a lot of consumers are paying with their credit cards, and these consumers may indeed change their buying behavior if a retailer starts taxing them for using money in a form retailers don’t like.
Love them or hate them, credit cards create money into the economy that otherwise wouldn’t be there, so retailers better be careful with this one because it might backfire
Interesting times ahead!