Process of elimination

Cash, credit or debit — or maybe just one and not the others? Even as technology advances, rising costs and the impacts of crime mean some Manitoba businesses are still seeking new ways to settle the bill with customers.

In Morden, Alex Kanski found himself in the middle of an unexpected controversy when he announced his family restaurant, Moment in Thyme Neighbourhood Grill, would be removing its card payment system and only accepting cash at the end of January.

Kanski said interchange fees — or the cost to process credit card transactions — and other fees to maintain card payments has cost the restaurant about $7,500 annually since it opened three years ago. For a 38-seat restaurant, he said, those losses are hard to take.

“With a restaurant, there’s only so many places you can cut costs,” Kanski said.

The days since have brought negative and positive responses from customers, Kanski said — and calls from business owners in other provinces saying they wish they could do the same. The Morden business has worked out a safety plan to ensure there’s never too much cash in the store at once, and is working on getting an ATM installed outside.

Kanski doesn’t regret his choice. (The restaurant has still accepted the occasional debit card payment, he said, but will soon give up the equipment necessary for such transactions, too.)

“We may have lost a couple customers here and there, but we’ve actually found, since all of this, we’ve actually been quite a bit busier with just people wanting to support us,” he said.

“We may have lost a couple customers here and there, but we’ve actually found, since all of this, we’ve actually been quite a bit busier with just people wanting to support us.”

While experts told the Free Press that a business choosing to limit payment options is a rare process, some have found success.

At Forge Bagel Co. in the St. Vital area of Winnipeg, ownership polled potential customers on whether they would be open to the business going cash-free ahead of its opening in November.

Glen Demetrioff, who owns Forge Bagel with his daughter Rachelle, said they recognized it would be a controversial decision for some, but, after discussions with law enforcement, decided the business would only accept electronic payments.

“The No. 1 element of theft is opportunity and if you get rid of that opportunity, the chances of theft go down. Cash on premises is an opportunity,” he said. “So we said, what we’re going to do is reduce the amount of opportunities that people would want to visit our establishment for crime, and that’s the sole reason that we wanted it.”

Forge Bagel’s online presence and a sign on the front door warns customers in advance that cash is not accepted. Demetrioff said the business incorporates the cost into its operations, and in the months since, it has largely become a “non-issue.”

“It definitely costs us more, the cost of the credit card processing fees is way more than trying to manage a separate cash box, because you’re paying that percentage on every transaction,” he said. “But in our case, we just felt it was the right method and the right approach.”

Interchange fees vary by credit card company and even down to the credit card itself. According to the Retail Council of Canada, basic cards can tack on fees of around 1.6 per cent, whereas a premium card could result in fees up to three per cent of purchases paid by the merchant. That money is split between the cardholder’s bank, card company and processing company.

Debit transactions are charged a set rate, usually between 10 and 40 cents.

The federal government allows businesses to surcharge customers for the fees, with the requirement that those fees be disclosed before the customer accepts the purchase. But some credit card network operators don’t allow surcharges on their machines and those that do can come with stipulations.

“The No. 1 element of theft is opportunity and if you get rid of that opportunity, the chances of theft go down. Cash on premises is an opportunity.”

Smaller businesses with smaller margins are more likely to add on that surcharge, said John Graham, director of government relations for the Retail Council of Canada (Prairies).

“I look at smaller businesses as just being more transparent about those costs that they’re having to occur, and a lot of customers that support small local businesses are supportive of trying to ensure that they are fairly transacting with that business,” he said.

Canada has some of the highest interchange fees in the world and while the federal government has introduced reductions over the years, they are still well-above average, Graham said. “It’s, for some, simply a cost of business. But ultimately, it’s a cost to consumers.”

At Winnipeg contracting company Reno Boss Inc., owner Marc LaBossiere said he’ll be frank with customers when discussing payment options for home upgrades and other building work.

“For me, if they’re smaller purchases, it’s just the cost of business if I have to pay the 2.75 or three per cent on merchant fees, it’s not the end of the world. But for larger purchases. I may tell them ahead of time, ‘Look, if you guys want to use your (credit) card because you’re collecting points and you got this trip coming up, I’ve got no problem with that, but I’ll probably have to charge you two per cent or 2.5 per cent just to offset some emergent fees,’” said LaBossiere, a regular contributor to the Free Press Homes section.

“And generally, if people are aware of all those things, they can make an informed decision and move forward on that.”

With big-dollar purchases, payment methods that circumvent interchange fees, like e-transfers, which typically have daily limits, and cash, can be more difficult. If a customer writes LaBossiere a cheque, he’ll go pick it up in hopes of avoiding the uncertainty of the postal service.

For LaBossiere, who runs several businesses, following changing technology is crucial. He’s moved to Square — a no-contract payment processor with flat-rate fees — and away from older processor Moneris, which is owned by two of Canada’s major banks and came with more costs.

“I understand the fees, it’s just to me, you’re undermining your own position by saying to people, ‘If you don’t have cash, we don’t want your business,’ people are just going to move on to the people that do,” he said.

While the question of what forms of payment to take is as old as bartering itself, Winnipeg Chamber of Commerce President and CEO Loren Remillard said, the increasing cost of doing business has inspired creative solutions.

“We are living in a world now where, at every turn, companies are facing increasing costs, most notably, of course, tariffs are raising the costs … I’ve seen some businesses where they do have a sign saying, ‘We only accept cash for payments under $20,’” he said.

“This is at the core of being in business. You’re constantly evaluating the marketplace, trying to figure out what your clients, not only their needs are, but what their preferences are — and that includes how they want to pay.”

malak.abas@freepress.mb.ca