Credit card firms to trim merchant fees, but retailers group ‘underwhelmed’

Feds expect move will help small and medium-sized companies save a total of $250 million per year

The federal government says credit card companies have agreed to trim the fees they charge the country’s businesses by 10 basis points.

Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, Mastercard and American Express that the feds expect will help small and medium-sized companies save a total of $250 million per year.

Starting in 2020, Visa and Mastercard will reduce the fees they collect from businesses to an average annual effective rate of 1.4 per cent — down from 1.5 per cent — and narrow the gap between the highest and lowest rates they charge retailers. American Express has agreed to provide more fairness and transparency as part of a separate voluntary commitment that recognizes its unique business model.

But a spokesman for the Retail Council of Canada said he was “underwhelmed” by the scope of the expected change because it would amount to just $100 worth of savings for businesses for every $100,000 worth of credit-card sales.

“In the sense that the trajectory is in the right direction, that part’s good,” said Karl Littler, vice-president of public affairs.

“We see this as a pretty small step relative to what might have been done.”

Littler said there are far lower interchange rates in many other jurisdictions around the world.

The changes, which the government says could help consumers, were unveiled at a Farm Boy grocery store in Ottawa by Finance Minister Bill Morneau and Mary Ng, the new minister for small business and export promotion.

The government says the reductions could help smaller businesses save thousands of dollars over the five-year period — and it is hoping the extra funds will encourage owners to invest, expand and create jobs.

Ottawa expects the lower interchange rates will enable smaller firms to avoid being at a big competitive disadvantage compared to larger companies, which have more leverage in negotiating with credit card firms for reduced fees.

The government also expects consumers to benefit from the changes because the lower costs to businesses will enable them to keep prices lower.

In November 2014, Visa and Mastercard voluntarily agreed to reduce their average effective fees to 1.5 per cent over five years — a period that began in April 2015.

Morneau announced in September 2016 that an independent audit found that the companies had met their respective commitments. At the time, the government also said it would conduct a review to ensure there was adequate competition and transparency for businesses and consumers when it comes to credit card fees.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Ucluelet fears orca protection could shut down fisheries

“I beg you to start a process to put a stick in the wheels and slow these people down.”

Ucluelet mayor thanks team at last meeting

Dianne St. Jacques is not running for re-election this month.

VIDEO: This is what buying legal pot in B.C. looks like

Take a look inside B.C.’s first and only legal pot shop located in Kamloops

10 things still illegal in the new age of recreational cannabis

Pot is legal – but there are still a lot of rules, and breaking some could leave you in jail

‘Police are ready’ for legal pot, say Canadian chiefs

But Canadians won’t see major policing changes as pot becomes legal

Mellow opening to B.C.’s only legal pot shop

About five people lined up early for the opening of the BC Cannabis Store in Kamloops.

Openly gay, female priest of B.C. church defying norms

Andrea Brennan serves Fernie at pivotal time in church’s history

Nova Scotia works to stop underage online cannabis sales

The government cannabis retailer moves to prevent workaround of online-age verification

Foster care is ‘superhighway to homelessness,’ B.C. youth advocate says

Katherine McParland grew up in foster care and lived on the streets

Carr, Morneau off to China next month to deepen commerce

Carr says Canada and China aren’t embarking on formal free trade talks

Edmonton girl guide sells out of cookies in front of cannabis store

On the first day cannabis was legal a young entrepreneur capitalized on cookie sales

Tougher laws introduced against bestiality, animal fighting

The Liberal government is proposing to strengthen the laws today

Money Monitor: Should you switch to a fixed-rate mortgage?

BMO’s Omar Abouzaher outlines the pros and cons of both types of mortgages

Earth still moving in Old Fort, B.C., but not above homes: geologists

Transportation Ministry crews are ready to start work on the Old Fort road

Most Read