With credit card usage rising due to the pandemic, growing online shopping and tight consumer budgets, small merchants are urging the federal government and the payments industry to move quickly to deliver on the Fall Economic Statement’s promise to lower processing fees for small business, says the Canadian Federation of Independent Business (CFIB).
A CFIB survey found that 74 per centof small businesses said that they want to see credit card processing fees drop to no more than one per cent of the total dollar sale. This would require interchange rates for small firms to be set at 0.7 per cent or less – half of the current average of 1.4 per cent, added the national organization.
CURRENT | PROPOSED MAXIMUM | |
Interchange Fees for banks (1) | 0.87-2.35% | 0.7 % |
Processor Fees for acquirers (2) | 0.2 % | 0.2 % |
Visa/Mastercard/Misc. Fees | 0.1 % | 0.1 % |
TOTAL | 1.17-2.65% | 1 % |
(1) | Example includes a broad sample of instore and ecommerce interchange rates available to small businesses (Visa’s Everyday Needs, Electronic, Card Not Present Tokenized and Mastercard’s Card Present EMV and Digital Commerce) |
(2) | Example is CFIB’s rate with Chase – the lowest rate available to a broad cross-section of SMEs |
The CFIB said its research shows 81 per cent of small businesses take a hit to their bottom line to cover the costs of accepting credit cards. Yet, many small merchants feel they have no choice but to continue accepting credit cards if they want to attract and retain customers and grow their business.
“While a handful of large multinationals can get special deals, small firms aren’t able to negotiate lower interchange rates on their own,” said Dan Kelly, President and CEO of the CFIB. “Ensuring that smaller merchants can access lower rates – including for ecommerce – is key to relieving some cost pressures, encouraging more small businesses to sell online and levelling the playing field with larger firms.
“As the spring budget approaches, CFIB is calling on Ottawa to quickly deliver on its promise to work with the industry in negotiating a better deal for small business.”
Here are CFIB’s recommendations to the federal government and Visa and Mastercard on ways to lower credit card fees:
- Lowering merchant fees to no more than one per cent of the total sale;
- Ensuring fees for e-commerce are kept low to allow small firms to compete online;
- Protecting low-cost Interac debit and the Code of Conduct.
Corinne Pohlmann
“Business owners want to do what they do best: run their business. With the increased cost of doing business and lack of staff, they don’t have the capacity and time to deal with confusing rules and rates that make it impossible to compare between different processors,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “Any changes made to credit card fees should be kept simple and help small firms better understand the rates they pay.”
Business owners can sign CFIB’s petition to lower credit card fees here.
The CFIB is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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