What can you do if your favourite stores stop accepting your card?

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You have a full shopping cart of groceries scanned and bagged. You're ready to swipe your card - and you learn your go-to store no longer accepts your preferred plastic.

Since 2014, Costco Wholesale Corp. began accepting Mastercard in Canada, ditching its long-term relationship with American Express. Meanwhile, Walmart Canada started to turn away Visa cards in its 400 stores across the country in June 2016.

"These situations are so far and few between," says Rubina Ahmed-Haq, a Toronto-based personal finance expert. "But when they're accepting one card exclusively, it can be a real nuisance, especially if you frequent the store or you're collecting points or rewards on your card."

Why do stores stop accepting certain credit cards? 
It's all about the bottom line, says Ken Wong, a Queen's University professor specializing in consumer affairs and marketing. All merchants are charged "swipe fees" by credit card suppliers but when major chains bring the big bucks from consumers, they wield more power at the negotiation table.

"In these cases, the exclusivity is not about a loyalty program, it's with a credit card," Wong says. "Merchants have to pay credit card companies, but different credit cards have different fees."

Ultimately, major retailers, including Walmart and Costco, can broker deals with a single credit card company if they offer the lowest "swipe fees." It might be a difference of 0.1 per cent, but when you're processing millions of dollars, this adds up, Wong says.

This was certainly the case when Walmart stopped accepting Visa in June 2016. The retailer released this statement:

"Following an evaluation of credit card transaction fees in Canada and the rest of the world, we have concluded the fees applied to Visa credit card purchases remain unacceptably high. Lowering costs such as these is necessary for us to be able to keep our prices low and continue saving our customers money. We sincerely regret any impact this will have on our customers who use Visa and remain hopeful that we will reach an agreement with Visa."

Visa shot back, calling the move "disappointing."

"Visa remains committed to actively working with Walmart so that Canadians can use their Visa cards wherever they wish to shop," the credit card company said in a statement.

Whenever consumers lose a payment option, they're going to be upset, Wong says. But it's a calculated risk that major stores are willing to take on.

What options do you have?
Your best option is simply to use a different credit card - and chances are, you have another one in your wallet.

"The reality is that consumers typically have more than one credit card," says Wong. "Not a lot of people have just a Mastercard or just a Visa - at least that's what these stores are banking on."

On average, Canadians carry about 2.2 credit cards as of 2016, according to the Canadian Bankers Association.

If you happen to be in the minority who carry only one card, you might consider getting a second credit card to use at your favourite stores. But before you apply, ask yourself a few questions:

  1. How often do you shop at the store that's no longer accepting your card?
    If you're visiting the store once every few months, it's not worth switching cards or opening a new one. Simply stick to other methods of payment when going to that store, Ahmed-Haq says.

    "There's nothing wrong with using your debit card, cash or the credit card they accept there," she says. "Don't worry about splitting rewards programs or missing out."

  2. Is it worth opening a card for that specific store?
    If you frequent the store for items that rack up a hefty bill every week, it may be worth opening a card specifically for that store, Ahmed-Haq says. But it's often not worth the hassle of getting a card that only benefits you at one place.

    "If you're going to make a change to accommodate usage at a certain store, make sure you're opening a card that'll offer you all the benefits you need, not just the ability to swipe at a specific store," she says.

    "If you shop at Costco all the time, get the Costco card and use it everywhere else, too," she says.
  1. Can you handle another credit card?
    Opening a second or third card is risky business, especially if you're already struggling to stay on top of payments. If you open another card to reap its rewards and perks, only to end up paying high interest fees or other penalties, you've erased any value, Ahmed-Haq says.
See related: Pros and cons of co-branded credit cards, Store credit cards: the good, the bad and the ugly
Published April 12, 2017

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