Small border businesses say greenbacks only
copyright the Chronicle April 22, 2015
by Nathalie Gagnon-Joseph
The value of the Canadian dollar has declined sharply in the past year, giving businesses on the border a choice to make. As of Tuesday, a Canadian dollar was worth 81 U.S. cents, according to Google Finance.
For a long time, many local businesses accommodated Canadian visitors by accepting their dollar at par. But they’re finding that’s no longer an option.
“We operate on a very small margin,” said Steve Breault, owner of Newport Natural Market and Café. “If we take it, and we lose 30 percent on the dollar, it just becomes impossible.”
He monitors the exchange rate every day and puts up a sign saying whether the store can take the Canadian dollar at par, or not.
His business never got to the point where it lost money because he quickly changed his policy as the Canadian dollar dropped.
This isn’t the first time Mr. Breault has been in this situation.
“We considered it before, but it never got as drastic as it has been recently,” he said.
Canadian travelers are very aware of the problem, he said. Many of them use credit cards, or pay in American money.
Mr. Breault isn’t worried about business, though.
“Canadians are pretty savvy, as far as value,” he said. “We’re still a good value, regardless of the exchange rate.”
And he would know. Mr. Breault has dual citizenship and lives in Ogden, Québec. He crosses the border almost every day to run his Newport business.
Greg Hamblett, who owns the Pick and Shovel in Newport checks the exchange rates weekly. He’ll accept Canadian money, but not at par.
He is seeing less and less Canadian trade, he said in an interview last week. His logic is if Canadian customers aren’t coming anyways, he might as well not accept their money at par.
“We’re willing to eat some,” Mr. Hamblett said about being okay with taking some of the burden of the exchange — up to 10 percent.
He brought up another problem altogether: the amount banks charge to change money. On top of paying the difference between the Canadian dollar and the American one, business owners sometimes have to pay a fee to change the Canadian money they receive into U.S. currency.
TD Bank in Barton charges a flat fee, $7.50 for customers, and $10 for everyone else. On April 21, for $100 Canadian, a customer would get $69.94 U.S. and people without a TD account would get $67.44 U.S.
The Duty Free Americas store in Derby Line charges $1 for exchanges, regardless of the amount being changed. There, $100 Canadian came to $74.50 U.S.
Even if banks don’t charge a fee for changing money, when they don’t have the requested currency on hand it has to be ordered, and they charge for the service accordingly, said Amy Morley, the financial services manager for People’s United Bank in Newport.
Banks near the border keep Canadian currency handy so they don’t have to order it.
There is a big discrepancy in exchange rates between different banks. On April 21, in Newport, Community National Bank, and Passumpsic Savings Bank said $100 Canadian yielded $68 and $69, respectively. People’s United Bank’s exchange rate came in at $75 U.S. for $100 Canadian.
That same day online, Google Finance said $100 Canadian came to $81.53 U.S.
Eleanor Leger, owner of the Northeast Kingdom Tasting Center, described taking the Canadian loonie at par as “shipping money out the door to Canada.”
“You’re talking about a business basically losing money,” she said.
For the Tasting Center, summertime is the high season. Last summer Ms. Leger was still accepting the Canadian dollar at par.
“I don’t think we know yet what’s going to happen,” she said regarding the possibility that business might decline because of the new policy and the devalued Canadian dollar. “Hopefully we have a compelling enough place for people to visit.”
Jay Peak Resort has accepted the Canadian dollar at par for over 30 years, said J.J. Toland, the director of communications and partnerships, but only for certain products.
Canadians can pay for lift tickets, the water park, and golfing with their own money taken at par. They can even pay a portion of their hotel stay with Canadian dollars, according to Steve Wright, the chief marketing officer at Jay Peak.
But Canadians have to pay for everything else in U.S. dollars, including food, beverages and equipment. If they booked their hotel stay online, they have to pay for 50 percent of their stay up front in U.S. currency, said Mr. Wright. If they want to pay for the rest in Canadian once they arrive, they can, he said.
“We are the size where we can absorb,” Mr. Toland said. “When you go into food and beverage, you start to lose a tremendous amount of money. That’s not feasible for us either.”
Jay Peak has no plans to stop accepting Canadian money at par, he said. Over the years the resort has built a loyal following from across the border.
“We’ve seen a great deal of appreciation from Canadian travelers,” he said. “It definitely costs us.”
Mr. Toland estimates that Jay Peak lost a dollar amount in the six-digit range by accepting Canadian money at par last year.
“The way it’s justified is the money that we lose in actually converting is smaller than the loss that missing out on all the Canadian business would be,” Mr. Wright said.
Over the years, Jay Peak has played the middle of the field, Mr. Toland said.
“Some years you lose, some years you win.”
contact Nathalie Gagnon-Joseph at [email protected]
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