The federal government has confirmed that it has reached new agreements with Mastercard and Visa to make small businesses eligible for reduced interchange fees. The new rates will come into effect in the fall of 2024.
To take advantage of these lower rates, small businesses will have an agreement based on the networks and their annual sales:
As a result, their average in-store interchange fee will be 0.95%. The average rate is usually 1.25%.
In addition, there will be a 10 basis point reduction on their interchange fees for online transactions. In this case, the discount is up to 7%.
Thanks to this contract, Visa, Mastercard and the major Canadian banks have agreed to protect reward points in Canada.
Interchange fees are a cost charged to merchants by the credit card networks (Visa, American Express and Mastercard) to process customer credit card payments.
This merchant fee can cost up to 5%, depending on the type of business, the volume of business generated and the card used by the customer.
This money is then used to offer rewards, points or cash back to credit cardholders.
The consumer will see nothing of this agreement on his bill.
This announcement will enable over 90% of small businesses to qualify for a reduction in their interchange fees. This can be significant, as it will reduce their costs by up to 27%. Please note that the American Express network is not included in this agreement.
Visa and Mastercard are also committed to providing free access to online resources to protect against fraudulent chargebacks, for example, which can be very damaging to small businesses.
It will be interesting to see how creative the networks and big banks will be to make up for the shortfall, even if they commit to protecting reward points.
Savings are here:
