A fee for paying your bill?

Telus is trying to soak credit card users for more. Here's how you can avoid it.

            There has been an increasing amount of frustration with the “big three” wireless and internet companies in Canada (Bell, Rogers and Telus). Many of these frustrations reside with the lack of competition in the sector and the extraordinarily high fees such companies charge in comparison to other developed countries. Not so recently, Telus began further thumbing their nose at the Canadian consumer by passing on credit card processing fees onto their customers to the tune of 1.5%.

How we got here

Telus began charging this fee to wireless and internet customers not under the regulatory protections of the Canadian Radio-television and telecommunications Commission (CRTC) on October 17, 2022. Telus then petitioned the CRTC to further apply this fee to select landline customers, which fall under CRTC regulation. The CRTC denied this request and has made public its concern that increased fees will make communication services all the more unaffordable. Furthermore, the CRTC stated that should the practice continue, they would “look into” taking further regulatory action - One can only guess what that means.

Who pays?

While most Telus wireless and internet payments via credit card are now hit with this fee, it seems that some customers, despite using their credit cards, are reporting through online forums that they have not been yet subject to this charge. This could be on account of either system errors during implementation, or that the customer is in Quebec or another jurisdiction which is not subject to this fee. That being said, the third category of customer which isn’t subject to this charge, due to the type of credit card they are using to process their payments.

In Canada the three major credit cards used are Visa, Mastercard and American Express (AMEX). Telus began passing on processing fees soon after the settlement of a class action lawsuit, originally filed in 2011, against Visa and Mastercard. The result of the settlement now allows merchants in Canada to pass on those interchange fees. Although so far it seems that the large majority of merchants have decided against it, I have noticed anecdotally that some merchants in smaller cities, such as Kingston, ON have decided to drop AMEX as a payment option.

"Justification"

Telus has been citing this ruling in order to justify passing this cost on to their customers. That being said AMEX was never a part of this class action lawsuit despite having some of the highest interchange fees among the three companies, likely due to having a relatively small market share in Canada (approximately 1%) and subsequently not worth the legal effort. As a side note, it seems likely that the reason some merchants have decided to drop AMEX is that they also plan to pass interchange fees onto their customers for Visa and Mastercard payments; without being in the odd position of not being able to charge such a fee onto an AMEX transaction.

Now what does this all mean for the discerning consumer? Well, Telus states on their website that all credit cards are charged this fee, but this is not necessarily true as it seems that AMEX customers are not yet subject to this additional fee. This could be either deliberate obfuscation by Telus; convenient wording (since AMEX products are largely considered “charge cards”); or perhaps just plain forgetfulness by the policy writers that AMEX even exists as a viable payment option in Canada. It’s also probably not too much of a logical leap to assume that publicly stating the exclusion of AMEX cards on their website would probably result in a substantial switch over to this cheaper payment option.

As additional amplification, I’d like to point out that after speaking to an AMEX customer service agent back in late 2022 I was informed that at that time AMEX had no agreement with Telus to pass on these fees and that any AMEX card holder being charged these fees should contact AMEX. This probably stems from the fact that AMEX was not subject to the prior mentioned class action lawsuit and was under no obligation to allow Telus to pass on their fees.

Avoiding the fee

Now, what is the best plan of action for the discerning human? Well if you already have an AMEX card, it’s simple. If not, you may be hesitant to get an AMEX simply to avoid a 1.5% fee. AMEX cards have a reputation for being expensive or for “rich people,” but they also tend to offer some of the highest rewards out there.

While I would suggest first looking at all the AMEX cards available to see which ones align best with your lifestyle and spending habits, I personally use the AMEX Cobalt which offers generous rewards for grocery and food (which I will cover in a subsequent post), the AMEX Green Card is the easiest no-brainer option if your only goal is to avoid this fee.The AMEX Green Card, while it doesn’t offer many advantages, is a zero monthly fee card and it still allows you to accumulate AE points which can be exchanged for numerous other points (including Aeroplan at 1:1).

Now how much will this realistically save you? In 2019, whistleout.ca posted that the average 20GB plan costs the Canadian consumer approximately $92 per month. Now, this is just a back-of-the-napkin calculation for demonstration purposes, but based on these numbers this would cost about $17 (92 x 0.015 x 12 months, rounded) per year in additional charges. Add a few of additional phones and plans to that and a family of five could easily be paying an additional $70-100 per year in cell service charges (same calculation x 5, understanding that some families may have more or less expensive plans). Add internet ($100+ a month is common in Canada) and these numbers jump to $33 for a single person and $87-$118 for a family of five per year simply for the “privilege” of processing transactions via credit card. Now, given the fact that we will all likely have cellphones (or a similar device) until the day we die, this could be hundreds (if not thousands) of dollars out of pocket if left unchecked.

Conclusion

Realistically, in the short term, this is not a lot of money for most. But why pay for a recurring charge that you don’t have to? With inflation rates stubbornly sitting at 4-5%, every little bit counts. Given that many of you could already be paying many transaction fees with your bank or brokerage account, paying for the privilege of paying your bills by the method of your choosing seems like an additional cost that no one needs to take on. That being said, maybe start thinking about reducing your fees with your bank as well (more to follow on that soon).

Disclaimer: Statements are my opinion only. I do not work for AMEX, nor within credit card industry, nor in the telecommunications industry.

DH, out.

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