Visa and Mastercard are American companies, and they essentially tax everybody by taking a percentage of purchase prices for themselves. Not exactly a small percentage either, 1.2% to 2.65%. Ever wonder why so many merchants say they don’t accept American Express? That’s because they charge quite a bit more to merchantes, 50% more than Visa or Mastercard. Anyway, we’re letting American companies tax us and we love them because we get rewards when we use cards. But it’s just a shell game because we pay more up front because businesses need to charge more to make up for payment processing charges. They get to sit in the middle and rake in the money.
Now the alternative in Canada is Interac. Interac charges a set amount per transcation. How much? 2 to 5.5 cents. Unless you’re going through Apple or Google Pay, and then it’s a percentage again.
Interac is also Canadian.
Want to stick it to Trump? Stop using credit cards (and Google Pay or Apple Pay) and switch to Interac. Want to make Canada better? Stop using credit cards and switch to Interac. Is it going to be inconvenient? Yes. Online shopping will be much harder but I have seen online Interac payments before and we can ask our favourite Canadian merchants to accept Interac online.
For this to work, Interac needs to incentivize using it like credit cards do.
All types of loans require a credit score of some kind, and credit cards are one of the best ways to build this. Additionally, credit cards usually offer some kind of return.
Also because of poverty, a lot of people have a dependency on credit or payment plans.
Interac needs to make a Canadian answer to the credit card.
I’m European. We don’t get credit card benefits, we just get stolen from. Everyone uses them nonetheless.
Oh wow no cash back at all??
What is it? You always pay the exact amount, why any cash (change) back?
On a lot of credit cards you get rewards for using them, like interest income. Basically the more you use it, the more interest you get, and you’ll get a credit in your account annually.
Some cards have different rewards like 2% back on all grocery spending for example.
Oh, we don’t have that. Nor air miles. Nor easy refunds.
I suppose the “richer” Europeans do though, I heard it referenced in an English movie of the same name.
Also, we never used checks, pretty much. Probably contributed to the explosion of CC use in the 90s despite the lack of benefits.
Is that a Cashback reference?
Yup! It’s the most recent movie I’ve seen.
That’s very interesting, I learned something new today!
I’ve only ever used a debit card when I was in Europe. There was zero incentive to get a credit card. Moving in the US was different, I needed to build credit and cards were the best way.
Now I have a Prime card because 90%+ of my spending is on Amazon and at Whole Foods, both of which give 5% cash back. I get thousands every year, something really hard to give up. I wish I could stop giving Bezos money, but the convenience of Amazon is just too much of an advantage for me. And I know that shopping is now just a drop in their earnings compared to AWS.
God, I would honestly be so happy if we did away with credit entirely in Canada and removed all incentive to have credit cards.
Many credit cards in North America have a cash back or loyalty points scheme. In cash back, you essentially get a cut of the network fee back as virtual value to pay off your statement. With points, you earn the points based on the amount spent, and can redeem them for things like travel or gift cards. Some merchant categories earn more as an incentive (e.g. 2% of purchase value or 10 points per dollar for groceries and monthly automatic bills, 1% or 5 points on everything else).
Edit: Oh and I should mention, some offer complementary car and travel insurance benefits, airport lounge access, electronic device insurance too. So it’s definitely compelling for a lot of people, since >90% of places don’t offer cash discounts or CC Fee, so people would essentially get or lose the benefits with no difference in price.
Well, we get none of that, which is why most cards used here are debit cards despite all being colloquially known as “kreditky”.
You can get a line of credit from your local bank, tranfser the available funds into your checking account on demand, then use your Interac card. The amount and rates are variable, so you can start with a small amount with a high rate (like starter credit cards), and as you build a reputation, you can be loaned larger amounts at a better rate. No third party credit card company required.
This is definitely one of the biggest hurdles with getting rid of credit cards, the lack of easy credit history.
Going the line of credit route is ok, but there’s no grace period before interest is charged, unlike most credit cards. So it’s something to be aware of.
Part of the problem for me is that paying interest to RBC, BMO, Scotiabank, TD, CIBC, BN in place of American payment networks when they aren’t really hurting for money, is not really helpful or impactful for anyone except for me in a negative way.
Credit unions do exist, and they keep money in the community much better than the big banks do.
The main reason to ditch Visa and Mastercard is hopefully if they get hit hard enough they’ll lean on Trump to shut up about annexing Canada. Greenland and Panama too.
There’s absolutely a way, for sure, I just mean it’s gonna be difficult to get most people on board until there is an option just as or more convenient than the current one.
Mileage may vary, but in my experience in attempting to get a line of credit, theres a lot more information that needs to be not only shared (for the banks and credit unions I’ve tried applying to, both and credit card statements for the last 3 months needed to be shared, along with a written explanation on what I’d need a line of credit for).
The barrier to approval is rather high as well, especially if you don’t have any assets to provide as collateral (for a secured line of credit at least.)
It’s doubly a challenge if you don’t have a “good enough” net worth as well which if you’re out of school and had to take out student loans, then you’re already starting out with negative net worth.
In comparison, I was blanketly approved for multiple credit cards and all I had to provide was the necessary identifying information and a salary.
It sounds like I’m shooting down the option of getting a line of credit, but it can be a very difficult process to obtain one unless you can get a guarantor to co-sign, or you happen to be in a financially secured position to begin with, which isn’t the case for a lot of people, but still a very good option to attempt at getting.