Canada's Lower Credit Card Fees for Small Business

What changed on October 19, 2024

The Department of Finance Canada announced that the credit card fee reductions came into effect on October 19, 2024. The agreements with Visa and Mastercard were finalized in December 2023. The government says Visa and Mastercard agreed to reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95%, to reduce domestic consumer credit interchange fees for online transactions by 10 basis points, resulting in reductions of up to 7%, and to provide free access to online fraud and cybersecurity resources.

Who qualifies

Eligibility is set by network, not by a single total. The government says small businesses with annual Visa sales volume below $300,000 qualify for the lower Visa interchange fees, and those with annual Mastercard sales volume below $175,000 qualify for the lower Mastercard fees. It also says non-profit organizations with transaction volumes below these thresholds benefit. A business could qualify with one network and not the other. The reductions cover domestic consumer credit interchange. They do not describe changes to Interac debit, commercial cards or cards issued outside Canada.

What the numbers do and do not mean

The 0.95% figure is an annual weighted average across in-store transactions, not a rate every sale receives. Individual card products still carry different interchange rates. Interchange is also only part of what you pay: your processor adds network fees and its own markup. The government states the reductions are "up to 27 per cent" and estimates savings of about $1 billion over five years for eligible businesses. Those are the government's figures for the program as a whole, not a forecast for any single business.

Your rights under the Code of Conduct

The Code of Conduct for the Payment Card Industry in Canada was revised in 2024. According to the Financial Consumer Agency of Canada (FCAC), acquirers and processors must give you 30 to 60 calendar days' notice before increasing existing fees, and you may cancel without penalty within 70 calendar days of the fee change if you received that notice. Acquirers and downstream participants must notify you if they will not pass on, in full, applicable domestic network core fee reductions. Monthly statements must show the effective merchant discount rate and the rate and total amount charged for interchange or wholesale discount rates, network assessment fees and other charges. Fixed-term agreements cannot automatically renew for the same length; they may be converted to renew for periods of six months or less, and you must get non-renewal notice at least 45 calendar days before renewal. The Department of Finance says the revised Code, effective October 30, 2024, shortens complaint handling response time to 20 business days.

How to check you are getting the reduction

1. Add up your annual Visa and Mastercard sales volume separately and compare each with its threshold. 2. Find the interchange detail on your monthly statement; under the Code it must show the rate and amount charged for interchange. 3. If your pricing is blended or flat rate, ask your processor in writing whether the reduction has been passed through to you. 4. If you received a notice that a reduction will not be passed on in full, review your contract and cancellation rights. 5. Keep your statements, and raise concerns with your processor first; FCAC supervises compliance with the Code. 6. If you sell in Quebec, also review the province's pricing rules before adding any card fee.