A Visa card is displayed in a wallet on Wednesday, May 15, 2024, in Portland, Ore. (Jenny Kane / The Canadian Press/ AP)
Credit card fees for small and medium-sized businesses are expected to decrease as an agreement between the federal government and major card companies takes effect. Visa and Mastercard have agreed to lower interchange fees by up to 27%, a move Ottawa claims will save businesses approximately $1 billion over the next five years.
Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), expressed gratitude to Finance Minister Chrystia Freeland for her role in finalizing the deal. According to Kelly, businesses meeting certain criteria can expect annual savings of about $350 for every $100,000 in Visa sales and $200 for every $100,000 in Mastercard sales.
To qualify for these savings, businesses must have annual sales of no more than $300,000 on Visa and $175,000 on Mastercard. While the official implementation date for the changes is Saturday, some payment processors have already begun passing the savings on to businesses.
However, the CFIB has raised concerns about some processors' lack of transparency. Stripe, for example, is under scrutiny for not passing the savings to all customers. Kelly criticized Stripe's decision to retain savings intended for small businesses, calling the move "extremely disappointing."
In response, Stripe clarified that customers using its Interchange Plus plan, which varies fees based on transaction types, will see the reductions. However, those on a flat-rate plan will not benefit, as the company cites rising costs in other areas that offset the interchange fee cuts.
On the other hand, payment processors like Moneris have committed to passing the savings on to qualifying businesses, regardless of the pricing model they use.
Marie-France Faucher, a spokeswoman for the Finance Ministry, emphasized that the fee reduction should benefit 90% of businesses that accept credit cards. She also stressed that the federal government expects all payment processors, including Stripe, to comply with the new fee structure and pass savings to businesses.
Faucher highlighted that the updated industry code of conduct now offers businesses more flexibility, including the ability to switch payment processors without facing penalties.
