The large credit card “companies” in Canada have agreed to freeze their “transfer fee” to 1.5% of the sales value, which is a good thing for retailers, but I am not sure if it is a good or bad thing for consumers. The transfer fee is the skim the credit card takes every time you use it to purchase a service or product, and it is paid by the retailer.
This skim can be as much as 3.0% of a sale that a retailer pays (for cards like Amex and other “premium” cards), so this fee freeze will help retailers limit their expenses for allowing us the convenience of using Credit Cards for purchases at their store (or services from their firm).
The Canadian Federation of Independent Businesses says the skim adds up to between $5 and $7 Billion a year in costs for them. Who pays that? The business has to incur the cost, but they simply pass on the cost with higher prices for services and products, and this is all so that we can make payments simply.
The other interesting question is how are the Credit Card providers (i.e. the banks) going to recuperate the income they will lose with this freeze? The banks will be the ones “subsidizing” this freeze, but they will (no doubt) find a way to either deal with the lost income, or find new income streams to extract the money from consumers (and businesses alike), (that is why I like investing in banks). The other options the banks have is to lower the “Freebies” and “Prizes” they have associated with their Credit Cards, time will tell how this all works out.