Surcharges on credit card purchases in MacEwan Student Centre are no more. The extra costs for purchases made with Visa or Mastercard ended on Friday, June 7, after the Students’ Union learned that these charges were being used by several MSC vendors, violating the contracts the businesses have with their credit card providers.
Any business in Canada that accepts Visa or Mastercard can not charge extra for a purchase made with a credit card, or make cash more advantageous, which is outlined in the contract businesses must sign with the credit card companies whose cards they accept.
The same rules do not apply to debit purchases, where surcharges are permitted.
Knowing that many MSC vendors were charging extra for using credit cards, the Gauntlet contacted SU vice-president operations and finance Eric Termeunde on Friday, sending an email requesting an interview.
After receiving the email stating the subject of our questions, Termuende contacted the SU’s bank, the Royal Bank of Canada, to confirm that credit card surcharges are not allowed on Canadian purchases.
“We asked for clarification about the rules and regulations and they told us that absolutely no surcharges on credit card purchases of any kind were allowed,” said Termuende. “Immediately after, we set to put a stop to the surcharges and inquired as to where they were taking place.”
Termuende then contacted SU general manager Jeff Marshall. The two surveyed MSC and took note of all the vendors who were charging extra for credit card purchases.
The vendors who were imposing surcharges readily admitted to it, not knowing that they were violating the contracts they have with credit card companies.
SU controller and finance manager Richard Fung then contacted the vendors on Friday afternoon, informing them about the violations. This resulted in the cancellation of all credit card surcharges in MSC.
Fung and Termuende both said that they did not have any knowledge of the surcharges prior to Friday afternoon.
All vendors complied with the SU’s advice about ending the charges, but Termuende explained that the matter is ultimately between the businesses and the credit card companies.
“We as a students’ union are a third party — the landlords to the tenants — so we advised them that this was not right and there would be repercussions not from us, but between them and the credit card companies,” said Termuende. “Our responsibility lies in advising them on what they should and should not do. Having said that, it wasn’t right that it was ever charged in the first place, which is why we put a stop to it as fast as possible.”
Vendors’ belief that they were allowed to charge surcharges on credit cards stemmed from a rumour that circulated amongst the businesses in early spring. Many believed that there was a change in Canadian consumer law that allowed businesses to pass the costs that credit card companies impose on them directly back to customers.
These rumours stemmed from a report published by the Consumers’ Association of Canada on April 2, 2013, which discussed a pending case in Canada’s competition tribunal between two credit card companies and former Competition Bureau head Melanie Aitken.
Media covered the report heavily, with news outlets reporting that if Aitken won her case, businesses would be allowed to impose credit card surcharges on customers. Some MSC vendors misunderstood the stories, believing that Canadian law had changed and credit card surcharges were now allowed.
One of the MSC vendors who believed this was Happy Hut manager Charlton Huns. Huns complied with the SU’s advice to cancel the credit card surcharges, but said that a recent decision by the federal government had changed the rules.
“When we signed our agreement with the bank, they had something like that in the contract, that you can’t pass the [credit card fee] onto the customer,” said Huns. “But the government passed a law a few months ago that allows the merchants to charge back to the customer for any bank charge.”
Financial Consumer Agency of Canada communications officer Natasha Nystrom confirmed that there has not been any recent changes from the federal government on the matter.
“From a Government of Canada perspective, there are no new regulations regarding credit card surcharges,” said Nystrom.
Although he will no longer charge them, Huns said that the loss of the credit card surcharges will hurt his business.
“Here, we get a really high rate of cards used for purchases,” said Huns. “If we charge the customer 25 cents for a purchase with a credit card, the business makes ten cents [off the credit card surcharge] and then we have to pay the rest. We have to protect our profits too. Operating here is not easy.”
When asked about the end of the credit card surcharges, second-year engineering student Sean Bennet said he was pleased to hear about the change.
“Food in MacHall can be pricey,” said Bennet. “I use my Visa a lot, so it’s good to know that it’ll be a little cheaper.”