Landmark commitments from Visa and MasterCard to reduce fee pressure on small merchants
Toronto/Calgary – Canada’s small business community is hailing new commitments that could bring an end to ever-increasing credit card fees that add $5-7 billion a year to the price of goods and services. Although the written commitments announced (Tuesday) by Visa and MasterCard do not represent a massive reduction in the “swipe fees” charged to merchants, the Canadian Federation of Independent Businesses (CFIB) is confident they will reduce some of the cost pressure and end the regular fee hikes that have been the norm over the past five years.
“Small businesses will be pleased to see the first ever reduction in interchange rates in Canada,” said CFIB president Dan Kelly. “As merchants have endured years of regular rate hikes, almost as important is the commitment to freeze the average interchange rate for the next five years. These changes have come about as a result of years of CFIB’s lobbying efforts.” CFIB will be closely monitoring the new arrangements to ensure these fee cuts are passed on to Canada’s small businesses.
“Today’s announcement should be a win for consumers too,” Kelly added. “Merchants have been forced to embed these rising fees in the cost of everything they sell, so reducing the cost pressure should help small businesses keep prices down.” The commitments represent an average 10% reduction in interchange rates. It is important to note that interchange rates are one of three parts that make up the processing fees merchants pay.
“After years of intense negotiations, CFIB compliments Visa, MasterCard and Canada’s banks for this important decision. In particular, small businesses are grateful to Finance Minister Joe Oliver and the late Jim Flaherty for their leadership in encouraging an industry-led solution,” Kelly stated.
CFIB also hopes to soon see further enhancements to the Code of Conduct for the Credit and Debit Card Industry that would bring more fairness and certainty for small merchants dealing with credit card processors. CFIB spearheaded the creation of the code in 2010, and has continued to lobby the industry and federal government on enhancements.
CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.