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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Poppy donation boxes have been delivered to restaurants, cafes, stores and places of businesses in Prince Rupert by the Royal Canadian Legion Branch 127 for the 2020 National Poppy Campaign. (Photo: K-J Millar/The Northern View)
National poppy campaign restricted by COVID-19

Prince Rupert Royal Canadian legion expects less donations to offer vital assistance to local vets

Elena Tran 9, grade five student at Conrad Elementary School learns about Truth and Reconciliation on Oct. 21 with the story of Chanie Wenjack who died at the side of rail lines while fleeing a residential school in 1967. (Photo: K-J Millar/The Northern View)
Conrad Elementary students learn of ‘reconciliACTION’ during Secret Path Week

Secret Path Week from Oct. 17 to 22 commemorates the passing of Chani Wenjack and Gord Downie

More than $10,000 in donations and toys was presented to the Salvation Army by the Prince Rupert Harley riders on Oct. 20, from the 39th annual Toy Ride held on Sept 26. (Photo: K-J Millar/The Northern View)
Harley Riders rode to victory with $10,000 donation to Salvation Army

The 39th annual Prince Rupert Harley Riders gifted more than 280 toys from the annual Toy Ride

The Prince Rupert Port Authority Land Use Plan will guide the growth within lands and waters under its jurisdiction and facilitate Canada’s trade with the world for the next 20 years. (Photo: Supplied by Port of Prince Rupert)
Land Use Plan finalized by Port Authority

PRPA Land Use Plan plan guides the growth and trade for next 20 years within its lands and waters

Such sweetness with all this candy. Dylan Kennedy 7, with his mom Kerri Kennedy volunteer at the Halloween Fest Committee event to bag candy for students in SD 52 on Oct. 19. (Photo: K-J Millar/The Northern View)
How sweet it is

Bags of candy were assembled by more than 25 Halloween Fest Volunteers for distribution to S.D. 52

B.C. provincial health officer Dr. Bonnie Henry gives a daily briefing on COVID-19 cases at an almost empty B.C. Legislature press theatre in Victoria, B.C., on March 25, 2020. (Don Craig/B.C. government)
B.C. sees 223 new COVID-19 cases, now 2,009 active

Two new care home outbreaks in Surrey, Burnaby

BC Liberals Leader Andrew Wilkinson, BC Greens Sonia Furstenau, BC NDP John Horgan (The Canadian Press photos)
British Columbians vote in snap election called during COVID-19 pandemic

At dissolution, the NDP and Liberals were tied with 41 seats in the legislature, while the Greens held two seats

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
B.C. driver thought he retrieved a dead bald eagle – until it came to life in his backseat

The driver believed the bird to be dead and not unconscious as it turned out to be

Chastity Davis-Alphonse took the time to vote on Oct. 21. B.C’s general Election Day is Saturday, Oct. 24. (Chastity Davis-Alphonse Facebook photo)
B.C. reconciliation advocate encourages Indigenous women to vote in provincial election

Through the power of voice and education Chastity Davis-Alphonse is hopeful for change

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

White Rock RCMP Staff Sgt. Kale Pauls has released a report on mental health and policing in the city. (File photos)
White Rock’s top cop wants to bill local health authority for lengthy mental-health calls

‘Suggestion’ included in nine-page review calling for ‘robust’ support for healthcare-led response

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

RCMP stock photo (Black Press)
Charges laid against Prince George man, 39, in drug trafficking probe

Tyler Aaron Gelowitz is scheduled to appear in court Nov. 18

Most Read