Canadian Government finalises lower interchange fees agreement

Back in May of this year, the Canadian government announced details of an agreement with Visa and Mastercard that would see them lower interchange fees they charge retailers.

Canada finalises lower interchange fees agreement

Now it says it has finalized the agreements to lower interchange fees for small businesses.

The agreements also protect reward points offered to Canadian consumers by Canada’s large banks.

The new agreements will help more than 90% of credit card–accepting businesses in Canada qualify for lower rates and see their interchange fees reduced by up to 27% from the existing weighted average rate.

These reductions are expected to save eligible Canadian small businesses about $1 billion over 5 years.

For qualifying small businesses, Visa and Mastercard have agreed in the finalized agreements to:

• Reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95%;
• Reduce domestic consumer credit interchange fees for online transactions by 10 basis points, resulting in reductions of up to 7%; and
• Provide free access to online fraud and cybersecurity resources to help small businesses grow their online sales while preventing fraud and chargebacks.

Small businesses with an annual Visa sales volume below $300,000 will qualify for the lower interchange fees from Visa, and those with an annual Mastercard sales volume below $175,000 will qualify for the lower fees from Mastercard.

Small businesses will need to qualify with each credit card network individually. Non-profit organizations with transaction volumes below these thresholds will also benefit from reduced rates.

As part of these new agreements with Visa and Mastercard, Canada’s large banks have agreed to protect Canadians’ reward points.

The new rates will come into effect in the Q3 of 2024.

“This is great news for Canadian small businesses across the country, which will collectively stand to benefit from savings of about $1 billion over the next five years,” says Rechie Valdez, Minister of Small Business.

“With these new agreements in place, our government is following through on our commitment to support small businesses that are facing higher costs because of inflation and increased interest rates.

Reducing costs on small businesses will enable them to further invest in their business and its growth, while helping support their success now and into the future.”