Small businesses in Canada will be paying lower credit card transaction fees starting this week.
The federal government’s agreements with Visa and Mastercard to reduce credit card fees will come into effect this Saturday, October 19.
President of the Treasury Board and Minister of Transport Anita Anand announced the reductions in Oakville, Ontario, on Friday.
“By reducing the cost of credit card transaction fees, eligible small businesses in Oakville can expect to save thousands of dollars over the years, allowing entrepreneurs to put more of their money towards growing their business,” she said in a statement.
📢Starting Oct. 19, Canadian #smallbiz will save up to 27% on credit card fees. That means more money for businesses like Farmhouse Artisan Cheese in #Oakville to increase their growth and capacity. pic.twitter.com/BGZyZJR5nc
— Anita Anand (@AnitaAnandMP) October 17, 2024
Small businesses pay fees to process Visa and Mastercard transactions, and the largest component is the interchange fee paid to financial institutions like banks.
Visa and Mastercard have agreed to the following:
- Lower domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95%
- Lower domestic consumer credit interchange fees for online transactions by up to 7%
- Provide free access to online fraud and cyber security resources to help small businesses grow their online sales while preventing fraud and chargebacks
The new agreement will reduce these interchange fees by up to 27%, according to the government.
It says lower credit card transaction fees will save small businesses thousands of dollars every year.
“For example, if a store processes $300,000 in credit card payments, they currently pay nearly $4,000 in annual interchange fees. With these new agreements, the store could save $1,080 in fees every year,” the Treasury Board of Canada explained in a statement.
The fee reductions will ultimately save eligible small businesses about $1 billion over five years.
This comes after businesses were allowed to pass the cost of credit card fees onto the consumer in October 2022.