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

Whalley falls in first game of Little League World Series

Team Canada goes down to powerful Panama in Williamsport

Surrey looks to target illegal dumpers with surveillance cameras

Since 2007, illegal dumping has cost the City of Surrey more than $8.5 million dollars

Peacock trapping to commence in early September, says City of Surrey

Since plan approved in June, bylaw has focused on ensuring people no longer feed the birds, ahead of relocation

Downtown Surrey BIA announces all-candidates meetings

BIA plans three events for civic candidates this September, ahead of the Oct. 20 election

Pauline Greaves joins mayoral race in Surrey

Greaves says she will run as an independent, but ‘joining a slate is under consideration’

VIDEO: Surrey to host Western Regional Quidditch Championship in 2019

The fictional game in the Harry Potter series has become popular around the world, with 600 athletes in Canada alone

VIDEO: World of Magic coming to Vancouver

Seven magic shows will appear at the Vancouver Playhouse from September 7 to 9

Safeway union urges prejection of mediator recommendations

Says mediator asks for too many concessions

Fire chases B.C. crews out of their own camp

Crews in Burns Lake had to leave after a wildfire reportedly overtook their sleeping quarters

VIDEO: RibFest kicks off in Langley

Free event features barbecue ribs, chicken, pork and brisket from Canada’s top rib artists

Hospitals to see ‘delays’ in care after losing Saudi students, health group says

About 1,000 Saudi residents called back to kingdom after suspending diplomatic relations with Canada

Bernier diatribe against ‘extreme multiculturalism’ boosts Liberal coffers

Party spokesperson Braeden Caley says online donations doubled, social media engagement quadrupled

‘Disjointed’ system hinders British Columbia First Nations in wildfire fight

More than 550 wildfires were burning in B.C. and crews were bracing for wind and dry lightning

Castlegar bridge designed by architect of collapsed Italian bridge

Riccardo Morandi designed the Kinnaird Bridge, which is part of Highway 3.

Most Read