Canadian merchants to pass interchange fees to consumers directly

Tuesday 31 May 2022 13:12 CET | News

Businesses in Canada may be eligible to claim credit card processing fee rebates after class action settlement with Visa and Mastercard.

Merchants can now apply for rebates on so-called swipe fees charged on credit card transactions dating back two decades, the Canadian Federation of Independent Business (CFIB) said. The settlement for the class action, launched in 2011, comes after the pandemic quickened a shift towards digital payments as more consumers shopped online.

Credit cards charge merchants so-called interchange rates on purchases, a fee shared between credit card companies, payment processors, and banks. Those fees can range from as low as around 1% for basic cards to nearly 3% for cards that offer rewards such as cash back or loyalty points. While the settlement doesn't change the fees, it does allow businesses to apply for a rebate of some of the fees paid since 2021.

Any Canadian merchant that accepted Mastercard and Visa credit cards between 2001 and 2021 and incurred merchant discount fees is eligible for a rebate, ranging from USD 30 a year or up to USD 600 total for small merchants, to USD 250 a year or USD 5,000 for larger merchants.

The settlement also gives merchants the power to pass credit card fees on to customers, starting in autumn 2022. While very few merchants are expected to add surcharges for accepting credit cards, CFIB’s officials said that giving businesses the ability to recoup those fees will help them push back against future fee hikes. Meanwhile, the federal government has repeatedly pledged to lower credit card processing fees for small businesses.

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Keywords: Visa, MasterCard, interchange fee, merchants, settlement
Categories: Payments & Commerce
Companies: Mastercard, Visa
Countries: Canada
This article is part of category

Payments & Commerce




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