Credit Card Fee Reductions Big Win for Small Businesses

In May, Deputy Prime Minister Chrystia Freeland announced that there are upcoming reductions in credit card processing fees for Canadian small businesses. This will act as a great benefit for SMEs in Canada. The federal government’s agreement with Visa and Mastercard to reduce credit card fees follows the result of a February petition from small business owners to lower processing fees.

The Canadian Federation of Independent Business (CFIB) believes this agreement will ensure that small businesses will not be consumed by card processors and inflation. “This is a significant agreement as many Canadian small business owners will now have access to a special, lower interchange rate designed specifically for them,” Dan Kelly, president of CFIB said.

Credit Card Interchange Fees Reduced for SMEs

High credit card fees have been a troubling issue for several years at this point, with small business owners urging the federal government to act. The new, reduced fees will be available to small businesses with Visa transitions that total $300,000 or less annually and also for businesses with Mastercard transitions of less than $175,000 annually. Both will also qualify for a 0.95% average interchange rate for in-store sales and a 0.1% cut in ecommerce fees.

CFIB thanks Deputy Prime Minister Freeland and the Presidents of Visa and Mastercard for this significant accomplishment in support of Canada’s small business community. Reducing fees for small businesses in processing online transactions and providing additional help with online fraud will be of particular help in encouraging more small firms to go digital,” Kelly stated.

Reductions will come into effect in the fall of 2024 and the federal government anticipates that the changes will help 90 % of SMEs that accept credit cards by lowering interchange fees by up to 27 %. “The new agreements secured with Visa and Mastercard will make credit card transactions fairer for small businesses, which have less bargaining power than larger merchants to negotiate lower rates. With lower interchange fees, small businesses will save money that they can use to grow their businesses and create more good jobs” noted Finance Minister, Chrystia Freeland.

You might also like