Lower credit card-processing fees for Canadian small businesses to take effect this month
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Small businesses in Canada will begin paying up to 27% less in credit card-processing fees to Visa (NYSE:V) and Mastercard (NYSE:MA) later this month, the government said this week, months after the initial agreement with the companies was first announced.
The Canadian government said in a statement on Tuesday that the lower fees will take effect on October 19 and save eligible businesses around C$1B ($740K) over five years.
“The federal government expects all members of the credit card industry, including payment processors, to pass these savings on directly to small businesses,” the statement said, adding that the agreement with Visa and Mastercard protects reward points awarded to consumers.
The agreement with Visa and Mastercard was first announced back in December. According to the government at the time, domestic consumer credit interchange fees for in-store purchases would be cut to an annual weighted average of 0.95%, while interchange fees for online orders would be cut by 10 basis points, bringing reductions of up to 7%. Businesses would be given free access to online fraud and cybersecurity resources to help them increase online sales while preventing fraud and chargebacks.
The government back then said businesses with annual Visa sales under C$300K would qualify for the lower fees from the company, and those with annual Mastercard sales under C$175K would qualify for the new fees from it.