Valley First

Continuing move away from cash may lead to expense creep for businesses, says expert

March 15, 2016

Penticton, B.C.—Business owners may find themselves facing increasing operating expenses as more consumers opt to pay with non-cash alternatives.

A recent study found that only 25 per cent Canadian transactions in 2015 used cash when paying for good or services. Other estimates put the percentage of non-cash transactions closer to nine out of every 10. This is not the most welcome news for business owners—who are required to pay a merchant fee with each card swipe at their terminals—given Canada has one of the most cashless societies in the world.

“Every swipe or tap of a payment card passes along a fee to a business,” says Craig Phillips, a business banking expert at Valley First, a division of First West Credit Union. “Merchant fees on credit cards and debit cards can add up. And, because fees are per transaction, it generally follows that more sales means fee expenses are creeping up in turn.”

The fee—called an interchange fee—often covers things like point-of-sale equipment, fraud protection and even software.

“Interchange fees are like any other expense line item,” says Phillips. “In recent years, we haven’t seen the per-transaction fee decrease, so a business owner would be wise to forecast these expenses and budget accordingly. Business owners can tap into their local business banking expert for help with an operating budget.”

The popularity of electronic payments, as well as the emerging mobile payment trend, should also lead business owners to consider comparison shopping when choosing a merchant services provider, says Phillips.

“A business could choose to only deal in cash, but that will just turn away sales,” says Phillips. “Paying the fee is pretty much table stakes for doing business in today’s market, which is why it’s so important to have the right point-of-sale package for your business.

Another crucial area Phillips flags is the fee “double dip”; that is paying a merchant fee for every card transaction but also paying a banking service charge when the payment is settled and the charge is credited to your account.

“If you’re running a low-fee or pay-as-you-go account, it’s likely your business has a limited number of free transactions per month,” says Phillips. “Understanding transaction volumes means you can select a business account, like a low-cost monthly flat-fee offering, that best meets your needs.”

About Valley First

Valley First is a premier provider of banking, investment and insurance services for residents and businesses in the Okanagan, Similkameen and Thompson valleys. As a division of First West Credit Union, B.C.'s third-largest credit union with 54 branches and 38 insurance offices throughout the province, Valley First brings innovative products, an extensive branch network and local decision making to the banking experience. For more information on Valley First, visit

Follow us
Twitter: @valley_first

Have a question? We can provide you with the information you're looking for.


Use our contact form to send us a message—we'll be sure to reply to you with the details you're looking for shortly.

In Person

If you're more comfortable coming in to see us, we'd be happy to chat with you about the questions you have.

By Phone

If you'd like to call us, here is a complete list of our branch and insurance office numbers.


Social Feed

Visit us on Facebook or Twitter

Sign up for our e-Newsletter