Credit Card

Canadian businesses are officially allowed to add a credit card surcharge

As of today Canadian businesses are officially allowed to add a surcharge or fee to purchases made with a credit card. The result of a class action lawsuit brought against Mastercard and Visa, businesses can now choose to charge extra to pass along fees they are being charged by the card issuers. This is not a mandatory surcharge that all businesses will charge. It is strictly optional whether a business wants to charge an extra fee or not.

This is something we have seen some small retailers already enacting even though it was against their merchant agreements with the card issuers.

Which cards are affected?

Technically speaking, these card fees are only allowed to be charged on Visa and Mastercard transactions. However due to the variety of credit networks, point of sales systems etc. a merchant may not have the ability to be able to differentiate between them so it may be charged to other issuers like American Express, JCB, Discover and so on.

Due to Quebec’s Consumer Protection Act these surcharges are not allowed to be charged in the province of Quebec.

How much is the surcharge?

This will depend on the merchant. They can charge any amount up to a maximum of 2.4% and they can pick which products have a fee charged. For example an entry level credit card may not incur a fee but a high end rewards card may.

Will this affect credit card rewards?

It doesn’t affect credit card rewards as the fees credit card companies are charging to merchants aren’t changing. Mastercard and Visa have already lowered the average rate they charge to merchants to 1.5% and for the most part we haven’t seen that affect the rewards being offered. You’ll actually still earn points on the surcharge as well, so your points and miles aren’t affected.

What is affected, is the value of your rewards if you are comparing shopping at a retailer who charges a fee versus one who does not.  Basically this can be seen as an opportunity cost for your rewards.

For example, if you spend $100 at retailer ‘A’ and they do not charge a fee your 1.5% return cash back card will earn you $1.50 in rewards. If you go buy the same thing at retailer ‘B’ and they do charge a fee – let’s say  they charge 1.5%, your end cost will be $101.50. You’ll earn $1.52 in rewards with your card however now you have spent $1.50 more than if you shopped at retailer ‘A’ so your net reward is only 2 cents.

Will this be wide spread?

Only time will tell how many companies will choose to charge a surcharge. The CFIB (Canadian Federation of Independent Business) who championed the class action lawsuit and this surcharge surveyed their own membership and only 19% said they will charge the fee. 26% said they only would if their competitors would, 40% were undecided and 15% said they would not. So you only have 19% of just under 4,000 member business stating they will charge it.

Rewards Canada’s Opinion

In my opinion I don’t think it will be wide spread. Yes, Telus has already stated they are going to charge 1.5% for accepting credit cards but Rogers has stated they won’t. And I feel most major retailers will not charge any extra fees as they are already accounting for these fees in their prices and by doing so it would hurt their competitiveness.

In fact, most businesses whether small, medium or big already account for credit card fees in their pricing and do you really think retailers who will charge a credit card surcharge will drop their pricing for those who don’t use a credit card? The CFIB states they need this option to compete with the big retailers who have negotiated lower fees with the credit card networks due to their volume. So does this mean a small store is going to drop the price of their products to compete with bigger retailers. Of course not. History has shown merchants will keep the prices the same and then charge this fee on top.

There are also the continuing arguments that credit card fees are more expensive for businesses but studies have shown the fees charged by the card networks are no more expensive than handling cash. Cash is subject to miscounts, employee theft, the cost to take it to the bank to deposit it and more. A lot of businesses don’t take into account the time that is required for handling cash. When someone pays with a credit card the retailer has less work and in many cases the funds are in the retailers bank account the next day.

Further studies have shown those who shop with credit cards spend more on average than those who pay with cash or debit. Again a boost to a business’ bottom line. Thus a business who chooses to charge this fee faces the possibility of losing customers to a business who does not. I have skimmed over various online forums over the past few days and a lot of consumers have said they will change their shopping habits and not shop at the retailers adding these fees.

Side note:

It even amazed me in reading these forums that consumers have already been doing this with the merchants who have already charged fees even though they technically weren’t supposed to. Some consumers have gone as far as to order food from a restaurant for pick up and when they get to the restaurant learn that location is charging a credit card fee so they leave – don’t take the food and don’t pay.  So not only do those merchants lose the sale but they also incurred costs to make the food that would most likely be thrown out. I personally don’t think I would go that far – I’d probably suck up the fee that one time but not return thereafter.


Retailers must provide a 30 day notice to customers that they will be charging a credit card surcharge. So if a store you went into yesterday or even 30 days ago didn’t have a notice – they are not supposed the charge a fee today.

Update: There is conflicting information on CFIB’s website about notifying customers as to whether they have to provide notice or not:

They state on one line “Step 4) Notify your clients (Optional)” but on another they state “please know that a 30-day customer notice period must pass before you can surcharge customers. ”

Wrapping it up

As of October 6, 2022 Canadian businesses can now officially charge a fee/surcharge for credit card transactions. It is in the very early stages with only one major retailer going ahead with fees at this point and we’ll know better over time as to how many business will charge an additional fee. In general I don’t think we’ll see a wide spread uptake of businesses charging an extra fee.

Time will also tell us how consumers will react to those who do add a surcharge – will they just suck it up and pay the fee or will they move their business away to merchants who choose not to charge a fee.

In terms of credit card rewards, this news does not affect the actual rewards as there are no changes to the fees the banks, card networks and issuers are charging. In fact you’ll earn rewards on this extra fee being charged but of course your spending a bit more on your purchase than you would have if you made the same purchase at another retailer. So if you want to earn rewards but also want to only spend $100 on a $100 purchase and not $101 or $102 then make sure you shop at a retailer who doesn’t charge an extra fee.