Canadian Retailers Feel the Pinch of Loonie Decline

Oct 13, 2015

Canadian retailers are expected to raise their prices in the coming months due to the weakening of the Canadian dollar and growing cost of imported goods. The loonie’s value has slid 16 percent over the last year against the U.S. dollar. This has made purchasing across borders more expensive for Canadian companies and is pushing Canadian retailers to hike their prices to combat depreciation. According to an internal Retail Council of Canada study, 49 percent of retailers said that the Canadian dollar’s devaluation increased their costs greater than 5 percent. The RCC study predicts that the biggest impact of the devaluation is yet to come, and that retailers won’t be able to maintain current sales price much longer.

Retailers ranging from Dollarama Inc. to generalist Canadian Tire Corp. get a lot of their inventory from the United States. But the value of the U.S. dollar has soared, making merchandise buying significantly more expensive. This is forcing Canadian retailers to make some tough decisions that include reducing staff or raising prices. To buy more time, large retailers are hedging their currency which gives them breathing room for an additional year. They are also in negotiations with their suppliers to give them bigger discounts to offset the currency pinch.

But small and medium sized retailers may not have these options. Very few have the flexibility or scale to move overseas sourcing to lower-cost markets. As a result, many have substituted international suppliers for domestic suppliers to stabilize costs. Despite these types of profit saving strategies, the report states that the cost increases are simply too much and consumers will have to bridge the gap. The study predicts that consumers will feel the pinch in January of 2016. On a positive note, the drop in the loonie has encouraged retailers to spend at home.

For now, retailers must decide which products and services should experience a price hike. They must be careful to balance the need for profit margins against customer loyalty. As the Canadian dollar struggles, customer service and loyalty become increasingly important. Customers expect fast and convenient payment processing. Providing these services could affect customer loyalty and retention. eMerchantBroker has helped many Canadian merchants obtain premium payment processing services. Now merchants can retain customers and grow their customer bases in partnership with EMB.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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