As the hospitality industry continues to struggle with labour shortages and inflation costs, rising credit card fees have further challenged the industry. The federal government has pledged to step in, however, to help provide some relief.
As part of their 2022 fall economic statement, the federal government has committed to enter into negotiations with the credit card industry and businesses to lower the credit card costs for small businesses. If these negotiations do not lead to a positive outcome, the government has been clear that they will move forward with fee regulation for credit card transactions in the new year.
“We have been waiting a long time and we applaud the government’s decision to finally step in to help the hospitality industry,” says Tony Elenis, president and CEO of Ontario Restaurant Hotel & Motel Association (ORHMA). “It’s not about profit, it’s about keeping the doors open.”
ORHMA has worked hard to bring attention to this issue, advocating for change and asking their members to submit letters to their MPs addressing credit card fee reductions.
This issue has been ongoing. In 2018, the government did agree to reduce the fees to a voluntary rate of 1.4 per cent for five years, but it just wasn’t enough, considering Canada is paying some of the highest fees in the world.
Earlier this year, a class-action suit was settled allowing businesses to pass on the up to 2.4 per cent surcharge to consumers so that businesses did not have to absorb these costs.
“This decision put business owners in the tough position of deciding whether it was worth the risk,” Elenis says. Many businesses saw this as too risky, not wanting to lose customers over inflated pricing.
Having the federal government take this step, however, shows that affordability and stimulating business growth is important for the hospitality industry. The hospitality industry is eager to see the result of the negotiations and the subsequent action by the government to make a final decision on credit card fees and their regulation.