Coast Capital Savings Credit Union

Coast Capital Savings Credit Union

April 24, 2007 11:30 ET

Coast Capital Savings: National Ipsos Reid Poll Reveals 72 Per Cent of Small Business Owners Feel Financial Institutions Make an Unfair Profit From Banking Fees

Canadian businesses pay an average of over $720 a year in service fees

SURREY, BRITISH COLUMBIA--(CCNMatthews - April 24, 2007) - If you are a small business in Canada, you think your banking fees are anything but, reveals an Ipsos Reid national survey commissioned by Coast Capital Savings, which shows small business owners shell out an average of $723.60 a year in service fees.

Small businesses pay on average $60.30 a month and conduct 48 transactions, according to the Coast Capital Savings survey published today. It also shows a strong majority - 72 per cent - feel financial institutions make an unfair profit from the service fees they charge.

The perception of unfairness is similarly high when it comes to so-called "deposit content fees", with 71 per cent of small business owners viewing these fees as unfair. Interestingly, 60 per cent of business owners did not even know about deposit content fees, and were not aware these charges were being added to their monthly bill until explained to them in the survey.

A deposit content fee is a penalty charged by banks for depositing more than a certain amount of cash or number of cheques into a business account, based on a pre-set limit on the account package. These fees range from $1.80 to $2.25 for every $1,000 of cash deposited and $1.60 to $1.80 for every 100 cheques deposited above a certain maximum threshold. Depositing rolled coin is even more expensive than paper money at some banks, with fees of $18 to $20 for every $1,000 of coin deposited to a business account.

Lisa Bolton, Coast Capital Savings director, small business, said the findings of the survey validate the credit union's recent decision to introduce Canada's first unlimited business banking account and a deposit-for-free "pay as you go account" for businesses with lower transactions.

"What small business owners have said in this survey puts pressure on financial institutions to reconsider these fees and give small business a break, and one obvious way to do that is through an unlimited business account which none of the banks currently offer," Bolton said. "Cost savings aside, an unlimited business account like the one Coast Capital recently introduced will help small businesses better manage their cash flow since all the fees they are currently charged by financial institutions make their monthly statements unpredictable."

Bolton said Coast Capital does not charge deposit content fees on its business accounts because many of its business customers take advantage of technology like electronic transactions, internet banking and the credit union's business depository ATMs, allowing it to reduce costs.

Coast Capital made headlines when it announced Wednesday, in advance of the survey results, that it is introducing a new business account that makes it the first in the country to offer unlimited banking transactions to all business customers for a fixed low monthly fee.

At $20 a month, the new unlimited account from Coast Capital Savings provides the best value in Canada, compared for example to the package with the highest transaction limit from the big banks, which charges as much as $135 for a limited number of transactions.

The credit union also announced it will now offer a "Deposit for Free" account targeted at small businesses with lower transactions.

Coast Capital Savings' unlimited account provides all the most common business banking transactions at no extra cost. The pay-as-you-go account charges a low 75 cent fee for transactions, with the exception of deposits, which are free. Separate fees apply for INTERAC, international ATM withdrawals and debit card or point-of-sale transactions outside Canada; features the credit union says are little used by its business customers.

Salim Ahmed, co-owner of Choices Markets, said he is not surprised by how much small businesses pay, adding that amount is much higher for business like his. He praised Coast Capital for moving to address some of the issues in the survey though its new accounts.

"You get a feeling that Coast Capital appreciates and wants your business as opposed to the banks who make you feel that you are a burden to them," Ahmed said. "I love the new flat fee of $20, because as an accountant I want to know exactly what my costs are and a fixed amount is a great help in budgeting, instead of having a fluctuating cost every month."

The two new business account offerings from Coast Capital Savings are part of a larger strategy to attract more business customers and provide them with enhanced services. As part of this plan, the credit union provides a comprehensive range of banking services and business development support to businesses through its small business specialists. Coast Capital also launched its Big Perks for Small Business program in October last year offering discounts on printing, shipping and computer service costs to its business customers.

The national business account poll was conducted this month by Ipsos Reid on behalf on Coast Capital Savings and interviewed 616 Canadian business customers employing up to 50 staff. Findings of the survey can be projected to this group within a margin of error of plus or minus 3.9 per cent 19 times out of 20.

Coast Capital Savings has $8.9 billion in assets, 360,000 members and 49 branches in the Lower Mainland and Vancouver Island. The credit union was the first full-service financial institution in Canada to introduce a free chequing account. Coast Capital Savings is Canada's second largest credit union, and is recognised as one of Canada's 50 Best Managed Companies, one of the 50 Best Employers in Canada, and was named the best corporate citizen in Canada's financial services industry by Imagine Canada.

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