MONTREAL - Canada??s convenience stores have been hit hard by illegal cigarette sales and higher credit card fees, in addition to the harsher economic conditions, the Canadian Press reports.

An industry study reveals that contraband tobacco sales cost stores more than $2.5 billion in yearly sales and $260 million in profits. Convenience stores paid $200 million in credit card fees, with $50 million of that because of higher processing fees instituted recently by major credit card companies. Also hurting the industry??s profitability was an average 5 percent raise in the minimum wage.

"Whether it??s endemic contraband tobacco or excessive credit card fees, we see poor government intervention. Either they are not enforcing their own laws or worse, they are ignoring situations that make no sense," said Michel Gadbois, senior vice president of the Canadian Convenience Store Association, which commissioned the study. "If we want to retain the local family business model, an essential community service and key contributor to community life, governments must do more ?" and better ?" to safeguard the business environment for convenience stores."

Lower gasoline prices in Canada contributed to convenience store sales dropping 3.6 percent last year after jumping 12.2 percent in 2008. Overall, last year??s net profitability for Canadian convenience stores barely reached around 1 percent, approximately half what it was in 2008.