Saying Goodbye to Credit Card Loading
It’s been a slice, credit cards, but we feel like this is a lopsided relationship.
Credit cards may be convenient, but there’s more to their story:
- Credit cards are expensive for local businesses because of their high payment processing fees
- Less expensive alternatives exist that are free for most and easy to use – namely, debit, e-Transfer and online Bill Payment
- By removing credit cards and using better-for-business alternatives we will save local businesses thousands of dollars in processing fees. This enables them to use their money for more important things.
Effective April 18 we have replaced the ability to load your Local Dollar wallet using a credit card with two new options for fast, safe, and easy loading:
Interac e-Transfer
Interac e-Transfer is a safe, easy, and low-cost way to send money from one Canadian bank or credit union to another. You can find specific loading instructions in our app.
Online Bill Payment
For those of you that keep your money with a credit union, it may be easier to make online bill payments. Now you can reload your local wallet the same way you pay any other bill – either in person at your local branch, over the phone, or online. Check with your credit union for details, and find further instructions in our app.
Still want to know more? Below is a note from Tyler from the Local Frequency team about the change.
Credit cards are easy to use. They’re convenient, give us access to funds to bridge pay days, and are often connected to rewards. A typical thought is “I might as well get the points since all methods of payment in my wallet are equal.” Why use debit when you can collect free airline points? It makes sense for us to use what is easiest and gives us a couple of bucks back.
While the way you pay may seem insignificant to you, it matters to the businesses you buy from. Credit cards have among the highest processing fees of any form of payment. This means that a piece of every transaction you make at a local business using a credit card takes money away from the business you love to support. Unfortunately, this also applies to Local Dollars if your wallet was loaded using a credit card.
Credit cards are loan products. When they first started, they were simply a way to use unsecured credit between pay days. Over time, credit cards have evolved into a cash-cow product that returns significant profits to financial institutions every year. The credit card portfolios of large financial institutions are a hefty profit center. It’s not uncommon for this portfolio to earn over a billion dollars in profit every year. Many people think that credit cards only earn money from the high interest rates charged to people who can’t pay their balance. However, credit cards also earn revenue from their customers who pay their balance every month. There is a long and bloated chain of fees that are associated with accepting credit card payments, including any extra rewards you have. Those additional benefits are being paid for by the business that processes your payment.
Why are there AVION commercials? Why are there ads for the new West Jet credit card? The logic is this: If the credit card company can get their brand of card in your wallet, you’re someone who is THEIR customer. That means whenever you spend at any business, that credit card company earns something on each transaction. In a way, it’s the credit card company saying that you as the customer wouldn’t have spent money at that business if it weren’t for that credit card. When shopping at local independent businesses, I don’t like to use a credit card. I’m at that business for another reason – not to collect airline miles when I buy a sandwich. I’m there for something special they do, for some value that the credit card company has nothing to do with. I go to Bernstein’s to have a reuben, shakshuka, or borscht – not to collect some miles that may contribute towards a future flight or a national chain’s gift card.
When you spend using a credit card, the business sees less money deposited into their bank account. Paying a $100 bill? The business might only see $96.50, rather than $99.93 if you used a debit card.
These add up for businesses and represent a large cost. Many local independent businesses we work with pay over $15,000 a year in credit card transaction fees. We think this is a problem, and today we are doing our part to stop that. As of April 18, we no longer accept credit cards as a payment method to reload your Local Dollar wallet.
The local businesses we work with would rather give you the cash-back directly than pay a credit card company to give you low-value airline points.
Use our program to earn better rewards that recirculate in our community, while helping to reduce fees paid by businesses. When you pay with Local Dollars, it’s less expensive for the business than accepting a debit transaction and much less than a credit transaction. As a way to thank you, the businesses offers a Local Dollar cash-back; Local Dollars that must be spent back at a local business. They’re good for you and for the local businesses you love.
Think of this like a shift. Shift the way you pay at local business to make it better for you and them. Be conscious of how things work. Pay with Local Dollars that are better for you and local business.
We are passionate about supporting local business, and we appreciate that you are too. Thank you for your willingness to help by switching to a lower-cost way to pay.
