Chapter 14

Behind the Scenes of the Credit Card

Summary:

The way credit card payments work may soon change in Canada. Merchants would pay less to the credit card companies like Visa and MasterCard. Consumers would see lower prices at their end too. The Competition Bureau has announced that it's trying to lower the requirements between credit card companies and merchants. In particular, fees merchants must pay in order to have the ability to accept payment by credit card will decrease. Most merchants do not have problems with paying the fees, because the credit card service is very beneficial. The bureau is concerned with "merchant restraints" in the contracts, which prohibit merchants from encouraging consumers to pay in cash or debit card. Some vendors do indeed offer customers discounts if they pay in cash despite the fact it might breach the contract. The new Visa or MasterCard premium cards also pose as a problem. Higher fees are charged if the customer uses one of those credit cards because they identify the customer as someone who is wealthy. Many stores increase the prices of their merchandises to help cover for the credit card charges. Merchants are becoming very angry at these surcharges and some even turned down premium cards for a period of time. It's clear that some changes have to be made in order to quench the merchant's anger and lower the prices down for the consumers. Hopefully lowering the fees will do the trick.

Connections:

The banks behind those credit card companies charge merchants for accepting their cards as payment. Credit cards make transactions quicker, easier, and safer. Theres no actual cash involved in the transaction so less security is needed. However, the fees behind them makes them less of a boon. Lowering the fees will allow many merchants to afford accepting credit cards from consumers. This would mean that many businesses who do not accept credit cards at the moment may change and accept them in the near future. Shopping will become much more convenient for consumers and merchants will benefit from having more customers. Both sides would benefit from this change.

Reflections:


Most customers use credit cards just for the convenience and don't really mind paying an annual fee for having them. At a consumer viewpoint, the prices on merchandise are unlikely to drop just because credit card fees are lowered. Larger retails do not care as much about the fees because they have to appeal to all different kinds of customers, the more the better. In order to do that, they cannot limit the ways customers pay them. Smaller businesses are more concerned about the fees and to make more profit, they are also unlikely to lower prices. Overall, I think that this solution that the Competition Bureau has announced will only quite down the merchant's anger, but towards us consumers, prices on goods will most likely not drop.

Chapter 11

Get Ready to Pay More for Power - A Lot More

Summary :

As of right now, British Columbia's electricity prices are considered pretty low, however, all that's going to change in the near future. Ontario's power prices are rising due to their energy polices, and if we follow in their footsteps, our electricity prices will go up as well. Ontario's Green Energy Act is a feed-in tariff (FIT) paid by consumers that would help wind and solar power productions. By 2015, consumers would pay a total of 3.8 billion under the Green Energy Act. B.C. also is planning to introduce a FIT program next year. The program will work by having BC Hydro enter into contracts with other power producers to provide backers of the projects with an acceptable rate of return. Some technologies that would be worked on include: biomass, bio gas, geothermal heat, solar, tidal and wind. Despite being accounted for only one-third of the electricity demand, all costs of the projects will be paid by the consumers. This is because the government has to prevent job losses and tone down the costs of industrial power prices. After the FIT program is put to action, the cost of residential power might increase by threefold!

 Connection :

This article connects to Chapter 11 of the textbook because if energy costs increase, then pretty much everything related to energy will increase as well. Businesses will be more costly to maintain and will need to make more income to balance out the expenses. Therefore, the cost of goods will increase depending on the type of business. Consumers might not buy as much as before because of the strain on their budgets. Business owners might change their inventory or stop selling less profitable items. Overall, businesses will probably make less gross profit and net profit than before and many might have to even close down.

 Reflection :

I think being updated with the current news would be extremely helpful towards business owners. Knowing that the electricity costs will increase can help business owners prepare and start making a plan for when the changes go into effect. Consumers will appreciate these news too because they might have to reconstruct their budgets. It also affects people who want to start their own businesses. Many people will have to rethink their business plans or even decide again whether or not they want to start up a business with the future conditions. In any case, information is always extremely important for decision-making.