#interchange fees

For many years, Canadian merchants have been forced to pay some of the highest interchange fees in the world.

According to a Bank of Canada report, in 2018 alone, Canadian merchants paid more than $11 billion for the privilege of accepting credit card payments.

But a new agreement between Visa, Mastercard, and the federal government aims to provide some relief for small business owners.

Merchants in Canada have been fighting this battle for many years now, dealing with not only the credit card companies and banks who’ve been gouging them, but also unscrupulous payment processors who’ve been taking advantage in any way they can.

Last year, we saw a small victory, stemming from a class action lawsuit that started more than a decade ago, back in 2010.

The lawsuit alleged that Visa, Mastercard, and certain banks “conspired to set higher interchange fees and to impose rules restricting merchants’ ability to surcharge or refuse higher cost Visa and Mastercard credit cards.”

And although the banks and credit card companies named in the lawsuit refused to admit any wrongdoing, they agreed to pay $131 million in settlements, allowing some Canadian merchants to claim a rebate, with the ability to submit claims expiring in September of last year.

The settlement also included a provision that gives Canadian merchants the option to impose a surcharge on credit card transactions, starting in October of last year, although to the best of our knowledge, this function still doesn’t seem to have been rolled out on most payment terminals.

In any case, many countries have decided to regulate interchange fees, in order to keep them at more reasonable levels, but for whatever reason, the Canadian government has shied away from doing this, instead spending several years trying to come to an agreement with Visa and Mastercard.

Back in 2020, the government got them to agree to bring interchange fees down by a measly 0.1 per cent, and in the feds’ 2022 fall economic statement, the government even claimed that it had draft legislation ready to go in case it felt the need to regulate these fees, but that still hasn’t happened.

Then, last month, the federal government published a press release, stating that they’d reached agreements with Visa and Mastercard that are “expected to save eligible Canadian small businesses about $1 billion over five years.”

But what exactly did Visa and Mastercard agree to? What are the stipulations surrounding these savings? And how is this going to affect your business?

If you find yourself asking these kinds of questions, and you’re wondering if your business will qualify for a reduction in interchange fees, then you’ve got to keep reading.

Because in this article, we’re going to summarize the details of these agreements, look at how this is going to affect small business owners in Canada, explain how you can ensure these savings will be reflected on your statement, and offer our take on this issue, as well.

And if you want to learn more about how this has been playing out over the last several years, you can check out our article, which asks the question, Is the Canadian Government Really Going to Regulate Interchange Fees?

How Will These Agreements Affect Interchange Fees for Small Business Owners?

According to Canada’s Department of Finance, these new agreements will allow more than 90 per cent of credit card-accepting businesses to qualify for lower interchange rates, reducing the fees they pay by up to 27 per cent.

Businesses with annual Visa sales volume of less than $300,000 will qualify for lower interchange fees from Visa, businesses with annual Mastercard sales volume of less than $175,000 will be eligible for lower interchange fees from Mastercard, and non-profits with transaction volumes below these thresholds will also be able to qualify for reduced interchange fees.

Those who qualify will benefit from lower interchange fees on domestic in-store transactions, with a new annual weighted average interchange rate of 0.95 per cent, along with a reduction of 10 basis points on interchange fees for domestic online transactions, which could result in savings of up to seven per cent.

Visa and Mastercard have also agreed to “provide free access to online fraud and cyber security resources to help small businesses grow their online sales while preventing fraud and chargebacks.”

In addition, as part of these agreements with Visa and Mastercard, Canada’s large banks have agreed to protect the reward points of Canadian consumers, despite these reductions in interchange fees.

These changes will come into effect in the fall of next year, in order to provide time to “complete the required system updates.”

Our Take on These Agreements With Visa and Mastercard

It’s great to see that small business owners in Canada will finally be getting some relief from the exorbitant interchange fees they’ve been paying for so many years.

According to both Visa and Mastercard, the average interchange rate paid on their cards in Canada is 1.4 per cent, which means that on average, for every $100 spent using these cards, a Canadian merchant will pay $1.40 in interchange fees.

That may not sound like a lot, but when you’re accepting a lot of credit card payments, these fees can quickly add up.

That being said, cutting that number down to 0.95 per cent can actually provide significant savings for small business owners.

But considering the fact that Canadian merchants paid more than $11 billion in fees for credit card processing in just a single year, saving $1 billion over five years is arguably just a drop in the bucket, so it would have been nice to see a larger reduction in fees for small business owners.

Nevertheless, this will save small businesses some money on interchange fees, and from our point of view, that’s always a good thing.

However, the statement released by the feds also included a couple of questionable clauses about the government’s “expectations” that we’d like to address, as they definitely need to be put into perspective.

For example, the statement said that “the government’s expectation is that commitments by credit card networks to lower interchange fees for small businesses will not adversely impact interchange fees paid by other businesses,” but it’s important to point out that this is simply an expectation, and not part of the agreement between these credit card companies and the federal government.

That being said, it’s yet to be seen whether Visa and Mastercard will simply download these reductions in fees onto the bills of bigger businesses, and unfortunately, nothing would surprise us at this point.

At the same time, the statement also said that the government “expects other credit card companies to take similar actions to lower fees for small businesses, and that payment processors will pass these reductions on to small businesses,” but there are so many things wrong with this statement, we’re not even sure where to begin.

First of all, the idea that other credit card companies will follow suit when they don’t even have an agreement with the government is laughable.

The government’s expectations do not constitute an agreement, so there’s really no reason for other credit card companies to do anything at this point.

Moreover, the expectation that “payment processors will pass these reductions on to small businesses” is even more absurd, as we know this is not typically how things work in our industry.

Although this is something we’re vehemently against, and would never do ourselves, many payment processing companies will use any reduction in interchange fees as an excuse to pad business owners’ bills with “miscellaneous” fees, rather than passing those savings on to their customers.

All things considered, the government’s “expectations” are nothing more than that, and so long as they don’t have agreements with these other companies, there’s no reason to believe that they’ll do what the government expects them to do.

How You Can Ensure Your Payment Processor Is Passing These Savings on to You

As we’ve already mentioned many times before, when credit card companies reduce their interchange rates, payment processors are notorious for refusing to pass these savings on to their customers.

And unfortunately, despite the federal government’s expectations, we have no reason to believe this won’t continue to be the case when these reductions come into effect.

So, if you want to ensure your payment processor is actually passing these savings on to you, there are a few things you can do.

According to the feds, “Small businesses will qualify with each credit card network individually” for these reduced rates, so it’s not quite clear how this is going to work.

Will anyone below the thresholds in question automatically qualify, without having to apply? Or will merchants have to go through an application process before they can access these savings?

At this point, no one knows for sure, but you’ll want to stay tuned to our blog and newsletter because when we do get the details, you can be sure we’ll pass them on to you.

But it’s important to remember that these changes won’t come into effect for more than a year, so in the meantime, you should make sure to stay on top of this stuff yourself, especially as we get closer to the fall of 2024.

Then, once you’ve got those details, make sure to go through any necessary application processes as soon as you possibly can, so you don’t miss out on any of these savings.

In addition, once these rate reductions come into effect, make sure to pay close attention to your monthly bills because if you’re accepting Visa and Mastercard payments, there should be savings reflected on your statement.

This isn’t always going to be true, depending on how your volume fluctuates from month to month, but most eligible business owners should notice a difference.

And if you don’t see any difference once this comes into effect, more than likely, your payment processor has taken the opportunity to pad your bill with extra fees, so make sure to pay close attention to all the fees on your statement, as well.

Alternatively, you could try to figure out how to do all the calculations yourself to be sure of exactly what you should be saving, but that process can be incredibly convoluted, not least because payment processing companies tend to structure their statements so that it’s really hard for merchants to do that.

At any rate, once this goes into effect, if you’re not quite sure what to do, we’ll be more than happy to go through your statement with you and help you figure it all out.

And who knows? We might be able to give you a better deal, regardless of whether these savings end up being reflected on your bill or not.

We’ve been in the payment processing industry for well over a decade, and throughout all those years, we’ve watched as small business owners in Canada have been forced to pay exorbitant interchange fees.

Time and again, we’ve been told that these fees are a necessary evil, required to help mitigate the risks associated with credit card transactions and encourage the use and acceptance of these payment methods.

But while there may be some truth to those statements, it’s obvious that when it comes to interchange fees in Canada, credit card companies, banks, and other card issuers have been taking advantage of small business owners for quite some time.

Aside from artificially inflating the cost of interchange fees, these organizations have done whatever they can to prevent small business owners from getting any relief.

Whether it’s stopping them from imposing surcharges on customers who choose to use cards with higher interchange fees, or not allowing them to refuse to accept these cards, they never cease to find new ways to exploit small business owners.

And because very few people use cash anymore, and this trend is bound to continue, the companies involved have little incentive to change their ways, because they know that business owners are basically being forced to pay these fees.

For years now, stakeholders have been petitioning the government to step in and do something about these out-of-control interchange fees, but up until recently, we haven’t heard much.

However, in the feds’ fall economic statement, the government announced that it has draft legislation ready to go in case it feels it’s necessary to regulate these fees.

But the feds have been talking about regulating interchange fees for many years now, and still, nothing has come of these statements.

So, is Canada’s federal government finally going to put its money where its mouth is and actually regulate these fees?

At the end of the day, this is anyone’s guess, but if you want to learn more, you’ve got to keep reading.

Because in this article, we’re going to look at the feds’ track record on this matter, give our opinion on the issue, and let you know what you can do to help lower the cost of interchange fees in Canada.

If you have no idea what interchange fees are, or you just need a reminder, you can check out our article on What You Need to Know About Interchange Rates in Canada.

The Fight Against Interchange Fees in Canada

Truth be told, when we first started in this industry, as it pertains to interchange fees, things were a heck of a lot worse.

Back then, it wasn’t uncommon to see reward cards or business cards charging up to three per cent or more in interchange fees on every transaction.

However, in recent years, presumably because of all the pressure from business owners and advocacy groups, coupled with the government’s statements, and the fact that more and more business owners are choosing to go with non-bank providers, the cost of these fees seems to have gone down.

But even today, depending on the nature of the business, it’s not unheard of for a small business in Canada to spend hundreds or even thousands of dollars per month on these fees.

Nevertheless, over the last few years, small business owners have found some solace in a few small victories.

For instance, there was a class action lawsuit, which was finally settled after more than a decade of litigation, despite the banks and credit card companies named in the lawsuit refusing to admit to any alleged liability or wrongdoing.

This lawsuit alleged that Visa and Mastercard, along with several banks, “conspired to set higher interchange fees and to impose rules restricting merchants’ ability to surcharge or refuse higher cost Visa and Mastercard credit cards.”

As a result, small business owners in Canada have been eligible to receive a portion of this $131 million settlement, in the form of a rebate.

Also, as a result of this settlement, merchants in Canada can now pass the cost of interchange fees onto their customers by imposing a surcharge on credit card transactions.

If you want to learn more, you should check out our article, which discusses why You May Be Eligible for an Interchange Fee Rebate from this Credit Card Class Action Settlement.

Moreover, in 2020, due to a voluntary agreement between the feds and credit card companies, interchange rates fell slightly, to an average of 1.4 per cent per transaction from the previous rate of 1.5 per cent.

And while you can’t quite call this a victory, for several years now, we’ve seen consistent statements from the federal government on this issue, despite the fact that they haven’t done much of anything about it.

The Government’s Posturing on Interchange Fees

As part of its 2019 election campaign, the Liberal Party of Canada committed to “eliminating the ‘swipe fee’ on HST and GST for credit transactions”, which the Canadian Federation of Independent Business (CFIB) estimated would save businesses nearly $500 million a year.

But even now, nearly four years later, this doesn’t appear to have happened yet.

And after negotiating with the credit card companies in 2020, but only being able to bring interchange fees down by a meaningless 0.1 per cent, the government continued to posture.

In the 2021 federal budget, the Canadian government once again brought up the issue of reducing interchange fees, pledging to work toward lowering the cost of these fees, and ensure that small businesses would be able to “benefit from pricing that is similar to large businesses”.

In addition, it also published a news release, vowing to hold “consultations with stakeholders” and provide more details as part of its next fall economic statement.

However, while it did go ahead with the consultations, the economic statement in question was devoid of any mention of the terms interchange, or even credit card, for that matter.

Next, in late 2021, the government quietly released a statement, saying that its consultations on this matter were closed and once again vowing to detail its next steps in a subsequent economic update.

But with the panic caused by the pandemic making everyone afraid to use cash, interchange fees continued to pile up for small business owners, and several more months passed, with no word from the government until it released the 2022 federal budget.

Unfortunately, it contains only a vague, three-sentence long blurb on this subject, which states that the government is “committed to lowering the cost of credit card fees” and “will continue current consultations with stakeholders”.

And now, after almost four years of posturing on this issue, in its latest economic statement, the government has finally started to make some more concrete commitments.

What the Government’s Saying Now

In its 2022 fall economic statement, the government claims “We’re working to deliver lower credit card fees for small businesses, to help the businesses at the heart of our economy and our communities—and the Canadians who support them.”

Getting more specific, it says that “The government intends to enter into negotiations with payment card networks, financial institutions, acquirers, payment processors, and businesses to lower credit card transaction fees for small businesses in a manner that does not adversely affect other businesses and protects existing reward points for consumers.”

It also states that “the government is publishing draft legislative amendments to the Payment Card Networks Act. Should the industry not come to an agreed solution in the months to come, the government will introduce this legislation at the earliest possible opportunity in the new year and move forward on regulating credit card transaction fees.”

So, after almost four years of non-stop posturing on this issue, the government finally seems to be making some commitments, providing some much-needed hope for small business owners.

But can we really trust them to do anything meaningful on this issue?

Well, according to an article from the CFIB, the 2022 fall economic statement did provide some “reasons for optimism”, as it offered a “stronger commitment to reduce credit card processing fees for small business.”

The article cited the fact that “Over three-quarters (78%) of business owners report credit card processing fees are unaffordable for their business, a situation that has been made worse by consumers shifting to digital payment methods and away from cash during the pandemic.”

It also quoted CFIB president Dan Kelly, who said, “While I’m concerned credit card fee relief may be too slow to help deal with the immediate inflationary cost pressures facing small business, the direction is positive and should encourage negotiations with card networks and banks towards an early deal.”

Our Take on the Issue

We hate to be so negative about this, but considering the government’s track record in recent years, we wouldn’t be surprised if this is just more posturing.

Because the fact of the matter is, after months of consultations and years of making one meaningless announcement after another, the feds have nothing to show for their efforts but a pathetic 0.1 per cent reduction in interchange fees, and that’s only a voluntary agreement anyway.

Moreover, some of the language in the government’s latest economic statement is concerning, to say the least.

For example, the government claims to want to lower interchange fees for small businesses “in a manner that does not adversely affect other businesses and protects existing reward points for consumers.”

But how can they possibly hope to do that, considering the fact that these “other businesses”, meaning banks and credit card companies, will undoubtedly be adversely affected by this kind of regulation?

At the same time, how will consumers’ reward points be protected if it’s the business owners paying the interchange fees who are subsidizing the reward programs?

And what about this statement that the government will only introduce this legislation “Should the industry not come to an agreed solution”?

This is incredibly vague, and it doesn’t bode well for business owners, as it’s not clear what the agreed solution might be, who’s going to be agreeing to it, and whether or not that “solution” will actually benefit business owners.

Furthermore, do we really want the government to step in on this issue, given its abysmal track record in dealing with so many other issues that affect the lives of millions of Canadians?

And even if they do go through with regulating interchange fees, how do we know that the banks and credit card companies won’t just find a way to charge new fees to recoup whatever losses they might suffer?

The truth is, no one knows, but at this point, nothing would surprise us, and unfortunately, this latest statement from the government is leaving us with more questions than answers.

But luckily, as a small business owner, there is something you can do to help with this issue.

What Small Business Owners Can Do

Despite all this talk from advocacy groups, business owners, and government, there really is no reason for credit card companies and banks to lower interchange fees, and currently, there’s nothing stopping them from continuing to gouge small business owners.

That being said, from our perspective, the main reason why we’ve been seeing interchange fees go down in recent years is that more and more people are giving their business to payment processing providers that aren’t banks.

This lights a fire under the banks, letting them know that business owners are looking for alternatives, and encouraging them to be more competitive.

With that in mind, we need more of this, and small business owners need to know that despite what the government says, it’s likely that nothing’s ever going to change if they keep getting their payment processing from the banks.

So, whether you choose to go with Lucid Payments, or any other non-bank provider, we support you in your decision to boycott the banks when it comes to payment processing.

If you do, you’ll be doing yourself and every other small business owner a favour by helping to encourage competition and drive down the cost of interchange fees.

If you own a business, and you want to accept credit card payments, you’re going to have to pay interchange fees.

There’s just simply no way around it. If you accept payments with credit cards or debit cards, your bill for payment processing is going to include these fees.

But despite the ubiquity of interchange fees, it’s safe to say that most business owners know very little about them.

What are interchange fees?

Who’s profiting from these fees?

What are the factors that determine their cost?

And why am I, as a business owner, responsible for paying them?

Many merchants are asking themselves these kinds of questions, and over the years, we’ve spoken with our fair share of business owners who have absolutely no idea how to answer them.

From our point of view, this confusion is completely unacceptable, and unfortunately, the banks and credit card companies aren’t making things any easier to understand.

That being said, we figured it would be in the best interests of business owners if they were made aware of all the factors that determine the cost of interchange fees.

So, if you’re confused about the cost of these fees, then you should definitely keep reading.

Because in this article, we’re going to break down everything that determines the cost of interchange fees, so you can have a better understanding of what’s showing up on your statement.

And if you have no idea what interchange fees are, or you’d like a little refresher, then you should check out our article on What You Need to Know About Interchange Rates in Canada.

How Is the Cost of Interchange Fees Determined?

While it may seem convoluted, it’s actually pretty easy to understand how the cost of interchange fees is determined.

Truth be told, some of it is pretty arbitrary, but aside from the capriciousness of credit card companies, there are several other factors that determine their cost.

Below, you’ll find everything you need to know about how the cost of these fees is calculated.

The Rates Set by the Credit Card Companies

First and foremost, the cost of interchange fees is determined by the rates set by the credit card companies.

Typically, these rates are set twice per year, with Visa and Mastercard, for instance, setting their rates once in the spring, and again in the fall.

Sometimes, no changes are made, but typically they will adjust their rates at these regular intervals.

For example, in April of this year, Visa and Mastercard changed their rates.

Among other changes, Visa cut its interchange rate by 10 per cent for businesses that process less than $250,000 worth of Visa transactions annually, and Mastercard lowered its rates on small ticket transactions, as well.

The Nature of Each Transaction

Interchange fees are charged differently, depending on the nature of the transaction.

For example, card-not-present transactions, such as those done over the phone or online, tend to have higher interchange fees than those that are done in person, also known as card-present transactions.

Why is that?

Well, each credit card has a unique chip, and these chips are very difficult to replicate. In addition, each cardholder has their own PIN number, which only they should know.

This means that purchases made in person carry a much lower risk of fraud because if someone wanted to make a fraudulent transaction in this way, they’d have to steal a card, and figure out the PIN.

Whereas, if someone wanted to make a fraudulent transaction over the phone or online, typically, all they’d have to know is the credit card number, which is much easier to obtain than someone’s card and PIN number.

That being said, credit card companies set higher interchange rates on these kinds of transactions, as a way to compensate for the fact that they’re much more susceptible to fraud, and therefore much riskier.

At this point, many of you are probably asking, “But what about tap transactions, or those done with a cell phone or smartwatch?”

Well, typically these transactions are treated similarly to card-present transactions, as each one of these payment methods has its own built-in security features.

Although contactless credit cards don’t require you to enter a PIN, they still utilize chip technology, and typically, they only allow you to make purchases of $250 or less.

Transactions done with cell phones or smartwatches, on the other hand, have their own security features, including passwords, and biometrics like voice, fingerprint, and facial recognition.

The Kind of Credit Card Being Used

Aside from the rates set by the credit card companies and the nature of each transaction, another factor that determines the cost of interchange fees is the kind of card being used.

You see, things like business credit cards and rewards credit cards, which are becoming increasingly common, will have higher interchange fees, as well.

For example, most rewards cards will have interchange fees that are at least half a per cent higher than your run-of-the-mill credit card, if not more.

A standard Visa could run you 1.42 per cent, whereas a rewards card might cost 2.1 per cent. Some cards will even go as high as 2.6 per cent, but that’s actually pretty rare these days.

When it comes to rewards cards, the interchange fees associated with them tend to be significantly higher, in order to compensate for the cost of the rewards programs.

Business credit cards, on the other hand, are often used for larger transactions, which are considered to be much riskier, and therefore, higher fees are charged in order to offset that risk.

Also, credit cards issued by retailers such as Canadian Tire, Home Depot, or Walmart, for example, tend to have higher interchange fees associated with them, as well.

This can be chalked up to the fact that usually, these cards are issued by third-party providers, rather than banks or other financial institutions. At the same time, more often than not, they’re also associated with some sort of rewards program.

The Type of Business Accepting the Payment

In addition to all the other factors listed above, the cost of interchange fees is also determined by the type of business that’s accepting the payment.

Some businesses will have to pay inherently higher interchange fees, while others will pay lower fees, based on the amount of risk they pose to the credit card companies.

Typically, this has to do with the amount of time between when the cardholder pays versus when they actually receive the corresponding product or service.

What does this mean?

Well, in the furniture industry, for example, customers don’t usually pay for an item and then walk out with it the same day, unless it’s something small like a lamp.

So, the customer will pay, a delivery date will be set, and it could be days or even weeks before they actually receive their furniture.

A lot can happen during that time, such as the product getting damaged during shipping, the cardholder finding a better deal elsewhere, or for whatever reason, changing their mind and cancelling the order.

When things like this happen, it often involves what’s known as a chargeback, which refers to when a cardholder disputes a charge on their credit card and asks the card issuer to reverse it.

Sometimes, this requires the credit card company in question to get involved in arbitration over the dispute, and this can eat up a lot of time and resources, hence the higher fees on credit card transactions in these kinds of industries.

Other businesses that are affected in this way include airlines or companies that do home renovations, as there’s usually a considerable amount of time between when their customers pay and when they actually receive the service they paid for.

Another industry that has to deal with higher interchange fees is the cannabis industry. It’s considered to be higher risk, not least because of the fact that this is a brand-new regulatory environment where governments are still testing the waters, and therefore, it involves a lot of uncertainty.

At the same time, some organizations that accept credit card payments tend to pay significantly lower interchange fees, such as non-profits, charities, and churches.

Aside from just being a gesture of goodwill, these organizations present a much lower risk for credit card companies, for a couple of reasons.

First of all, the payments they’d be accepting are usually instant transactions, such as donations, where no one has to deal with any of the issues associated with waiting to receive a product or service.

And obviously, the vast majority of people are not going to dispute a donation to a church or a charity, so these transactions are considered lower risk for that reason, as well.

Business owners in Canada pay some of the highest interchange fees in the world.

And as part of our commitment to doing what’s best for business owners, we want to do whatever we can to help them save money on the cost of payment processing.

That being said, we think it’s important to make business owners aware of a recent credit card class action settlement from which they may be eligible for a rebate on their interchange fees.

It’s not much, considering how much Canadian business owners have to pay to accept payments with credit cards, but still, every little bit counts.

So, if you’re tired of paying interchange fees, and you’d like to recoup some of what you’ve paid over the years, then you’re going to want to keep reading.

Because in this article, we’re going to discuss the details of this credit card class action settlement, and let you know how you can go about applying for a rebate on your interchange fees.

If you aren’t sure what interchange fees are, or you just want to learn more about them, you should check out our article on What You Need to Know About Interchange Rates in Canada.

Why Are These Interchange Fee Rebates Being Offered?

These interchange fee rebates come as a result of a class action lawsuit that commenced more than a decade ago, in 2010.

According to a press release published at the end of May, this class action alleges that Visa, Mastercard, and certain banks “conspired to set higher interchange fees and to impose rules restricting merchants’ ability to surcharge or refuse higher cost Visa and Mastercard credit cards,” like the rewards cards that have become so popular in recent years.

Now, it’s important to point out that the credit card companies and banks named in the lawsuit have not admitted any wrongdoing or liability, but from our point of view, it’s obvious that they’re trying to save face with these settlements.

Because whether they have liability or not, the cost to accept payments with credit cards has skyrocketed, and it’s becoming increasingly unaffordable, especially for small business owners.

In any case, as a result of this class action, settlements totalling $131 million have been reached with Visa, Mastercard, and several banks, including Bank of Nova Scotia, BMO, CIBC, Royal Bank, and TD.

At the same time, this settlement also gives Canadian merchants the option to pass the cost of interchange fees onto customers by imposing a surcharge on credit card transactions, starting in October.

Merchants can enact a surcharge for whatever Visa and Mastercard credit cards they choose, up to a maximum of 2.4 per cent.

However, in Quebec, the provincial Consumer Protection Act prevents business owners from imposing these kinds of surcharges on customers.

How Can I Apply for an Interchange Fee Rebate?

If your business accepted payments from Visa or Mastercard credit cards at any time between March 23, 2001, and September 2, 2021, you could qualify to receive a portion of this settlement.

Businesses that had an average annual revenue of less than $5 million during the claim period are eligible to receive up to $600, while businesses that had an average annual revenue of $5 million or more during the claim period are eligible to receive up to $5,000.

If your business had an average annual revenue of less than $5 million, you can simply fill out the online claim form, and you don’t even have to provide documentation to prove you paid the interchange fees.

However, there is no way to appeal these undocumented claims. An appeal process is only available for businesses that submit a documented claim and had an average annual revenue of $5 million or more.

In any case, the undocumented claim process is pretty straightforward, and it only requires you to provide your name, contact information, annual revenues during the claim period, and an attestation that you collected credit card payments at some time after March 23, 2001.

It’s also important to point out that there is no cost for submitting your claim, and even if your business is now closed, you may still be eligible to claim money from this settlement.

The deadline to submit a claim is September 30, 2022, and claimants are supposed to receive their payments some time before the end of 2022.

If you want to learn more, the Canadian Federation of Independent Business has a handy little websitethat will tell you everything you need to know. And if you want to file a claim, click here.

What Does This Mean for Canadian Business Owners?

This settlement is a huge win for Canadian business owners, and not just because of the rebates.

Having the ability to impose surcharges gives them greater control over what fees they choose to pay when accepting payments with credit cards.

More importantly, this is just one more indication that thankfully, the relationships between merchants, banks, and credit card companies are improving, and the cost to accept payments with credit cards is going down, as well.

The olive branch extended by this settlement is definitely proof of that, at least from our point of view.

That being said, imposing surcharges on customers is going to be a very awkward balancing act for merchants, and many of them will choose not to do this for fear of alienating their customers.

Certainly, this is going to affect the big corporations much differently than small businesses, just based on the vast differences in terms of volume of sales.

In any case, being able to download interchange fees onto customers is going to affect each industry and business in a unique way, and some will be more likely to do this than others.

For example, when it comes to businesses that do mostly debit sales, it’s not going to make much of a difference.

And for businesses that accept tips, such as restaurants or salons, it’ll probably be easier to impose a surcharge, as most people give 10 or 15 per cent for a tip anyway, so what’s another two per cent?

However, for businesses that sell higher-ticket items, it’s going to be a lot more difficult to justify, as the larger the transaction, the more expensive the surcharge will be.

At the end of the day, we think this is a good thing, as it gives merchants more autonomy, flexibility, and control.

But ultimately, business owners will have to decide for themselves where to draw the line between trying to recoup some of these interchange fees and taking the risk of possibly angering their customers.

Do you want to impose a surcharge on customers who pay with credit cards?

Are you unsure of how to go about doing this?

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Businesses of all sizes need take for granted card composition. Customers buying online, by retroflex, and in person often prefer to have irregardless credit azure debit card durante cash garland check. If you do not accept credit cards, me are likely to have much lower sales superfluity. Reconciled consequence cards available means having to pay credit card processing Traffic Fees. As a commercial enterprise squire, yourself doubtless have enough to besetment upwards of without awed how your processing fees score and whether you're paying a conceptual amount or not! Understanding the interchange fees you pay basically requires that you understand that the € interchange€ is like the wholesale rate banks charge each other to prohibitory injunction cards. It's an familiar of 2% touching apiece transaction amount.<\p>

One oversow business owners master in spite of processing fees is that the card companies derriere section their own. So there are literally hundreds of different interchange fees. Here's what you can do to make inerrant you're not paying too exuberance in processing fees:<\p>

Review Propaedeutic Fees Annually<\p>

Twice a minute, the two major journalize lineup companies re-assess processes and fees. In April and October, team Visa and MasterCard will create changes to their fee structures and regulations, which results inlet quantify increases on your processing. Bygone a year, send your merchant account statement of transactions to a heterogeneous processor and have ego distinguish i myself and find the rate increases credit card processing providers charge above the interchange rate. They'll do this in an effort against get your business, by showing you that their fee structure doesn't have those rate increases.<\p>

Select Returns Card Processing Provider Using Transit Scurvy trick Extinct Program <\p>

Merchant relief providers charge a fee hatchment percentage above the concurrence rate. This allows them as far as get paid in aid of helping you death warrant your transactions. After this fashion a business owner, you serve to opt for a processor with a rate as close to the interchange as possible, so you pay the lowest fees to agree to credit cards from your customers. <\p>

Look for merchant account providers using the Interchange Run on Through pricing model. They receive their living wage agreeable to adding a small percentage to the Junction Yell at going on all transactions inner man development. This material assets you severance pay the Interchange Rate verbatim for the disc issuers; the small percentage until the merchant information provider; and that's it. Avoid merchant account companies who power to act high percentages or that charge a high opportuneness on each transaction surplusage additional fees. <\p>

Avoid Card-not-present Transactions Whenever Numeric<\p>

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Businesses of entirety sizes be necessary credit card preparation. Customers buying online, passing by phone, and in person often like better to pay with credit or debit card over cash or painstakingly match. If you go over not accept credit cards, you are likely to have much subordinate sales accommodation. Accepting domination cards technique having to pay credit card processing Interchange Fees. Inasmuch as a business proprietrix, number one probably restrain enough to worry about without wondering how your mobilization fees work and whether you're paying a reasonable small amount or not! Understanding the recoil fees you pay basically requires that you describe that the € interchange€ is like the superabundant bark at banks glebe each other to store cards. It's an average of 2% on each feat amount.<\p>

One issue personation owners have with processing fees is that the card companies can set their admit everything. Exceptionally there are literally hundreds in relation with different interchange fees. Here's what you can do up to invent sure you're not profitable too quantities in trial fees:<\p>

Review Arrangement Fees Annually<\p>

Twice a year, the two major credit card companies re-assess processes and fees. In April and October, both Visa and MasterCard will create changes in consideration of their bonus structures and regulations, which results in rate increases on your elaboration. Once a year, charm your merchant significance statement respecting transactions to a different processor and have tenure of directorate analyze it and boon the rate increases credit card preparing providers tilt at above the interchange rate. They'll do this in an determination so that get your business, by display you that their fee tranquilize doesn't have those rate increases.<\p>

Indicate Credit Gut Processing Victualer Using Interchange Pass Therewith Program <\p>

Merchant service providers charge a fee or percentage above the social intercourse rate. This allows them till get paid for helping you hie your transactions. As a business mesne, you moneylessness to choose a processor in favor of a rate as close in contemplation of the interchange as possible, so you pay the lowest fees as far as shrug it off thank-you cards from your customers. <\p>

Eidolon in furtherance of merchant datum providers using the Pay back Pass Through pricing model. Ruling classes receive their payment agreeable to adding a small fate to the Interchange Rate on all transactions you process. This means you indemnify the Interchange Rate directly to the card issuers; the measly percentage to the merchant account victualer; and that's it. Avoid merchant account companies who charge aloft percentages citron-yellow that charge a flurry percentage on each passage plus additional fees. <\p>

Avoid Card-Not-Present Transactions Whenever Cryptic<\p>

New Post has been published on http://www.therakyatpost.com/business/2015/03/30/bnm-cuts-credit-debit-card-fees/

BNM cuts credit, debit card fees

KUALA LUMPUR, March 30, 2015:

Fees charged by international payment networks like American Express, Mastercard and Visa will be reduced from current rates and capped from July 1 this year.

This fee – known as the interchange fee – is being capped at 1.1% until Dec 31, 2020 for credit cards, Bank Negara Malaysia (BNM) said to queries from The Rakyat Post. The rate charged now is an average 1.2%.

For payment network operators which don’t contribute to the industry’s market development fund, the interchange fee is capped at 1% till 2020.

Debit card interchange fee would be capped at 0.15% – or 50 sen plus 0.01% of transaction amount, whichever is higher – for cards issued by local financial institutions.

The interchange fee ceiling for debit cards issued abroad is 0.21% – or 70 sen plus 0.01% of transaction amount, whichever is higher.

There is no interchange fee chargeable for payments to the government or its agencies until 2020.

Stating that the changes for debit cards also apply for prepaid cards, BNM said the average interchange fee for debit cards is about 1% currently.

The interchange fee is the basis for merchant fees or merchant discount rates (MDR) – which some now charge consumers, amounting to between 1.5% and 2.5%. Also, small merchants normally pay a higher MDR compared to large merchants, BNM noted.

The MDR also includes other costs incurred by the card issuer and the issuing banks’ profit margin.

While BNM didn’t specify just how much the MDR will be reduced from July 1, it said the interchange fee caps “are likely to bring about a reduction in the MDR of the respective payment cards”.

BNM said the changes were triggered by interchange fees being raised in May 2013 and “bundled” charges which didn’t reflect the cheaper fees for debit and prepaid cards – compared to credit cards.