A few months ago, Visa Canada started running a major media campaign with a new, made-up word: smallenfreuden. They put it on billboards, purchased TV ads, tweeted about it, and eventually, they even got around to telling us what it meant.
According to Visa TV ads that started running during the hockey playoffs, smallenfreuden is derived from the English word "small" and the German word "freude," meaning joy. When Visa asks you to smallenfreuden, however, they are asking you to use your credit card whenever you make small purchases.
Wait a minute. Where's the joy in that?
In Canada, CFIB, on behalf of the small business community, has been sounding the alarm bells for years about the outrageous fees charged by the credit card companies and their partners, the big banks. Merchants already pay upwards of $5 billion dollars a year (2-3 per cent of each transaction) for the privilege of accepting credit cards. With new tiers of premium cards being introduced regularly (including a new "uber-premium" card from Visa planned for this fall), this cost is already rising.
Now Visa wants you to use your credit card for small purchases, which traditionally have been the domain of lower-cost payment options like Interac Debit and cash. If the idea were to catch on, that would mean even higher credit card processing costs for merchants, and let's face it, higher prices for everyone.
Add to that, of course, the fact that Canadians already carry a less-than-healthy level of household debt. The average Canadian's non-mortgage debt recently reached a new record level of just under $27,500. Even with low interest rates, that means about $1,400 a year in interest. Increased use of credit cards can only exacerbate this situation.
So who gets the joy here? I'll tell you who. It's what CFIB has playfully dubbed the biggenbanken. That's right. The credit card companies and their partners, the big banks, stand to derive tremendous financial benefits at the expense of small businesses and all Canadian consumers. When Visa first introduced the campaign, it struck me that their made-up word sounded a lot like the real German word schadenfreude, meaning joy derived from the suffering of others, and it turns out that this is a fairly apt description of the relationship between credit card companies and small business.
CFIB was quick to counter Visa's ill-advised campaign with an online campaign of our own, re-framing the whole notion of smallenfreuden in a way that exposes what it really is: another cash grab by the card companies and banks. It identifies the winners (the "biggenbanken") and losers (what we've called the "hurtenvendors") in the smallenfreuden campaign, and the reasons why consumers should say "nein" to using their credit cards for small purchases.
In the coming months, we will be doing much more to expose the darker side of smallenfreuden, and to encourage consumers to find the true "joy of small," by shopping at their local small businesses, and paying with Interac Debit or cash. You may see our point-of-sale signs at CFIB member businesses, and you will continue to see our Facebook posts and tweets. We encourage everyone to join in, using Visa's #smallenfreuden hashtag to add your two cents on why you think smallenfreuden is German for "a really bad idea."