Mastercard and Visa have agreed terms with the Government of Canada to lower credit card transaction fees for small businesses in the country.
Small businesses will now pay a 0.95% interchange fee for in-store transactions, as well as reducing domestic consumer credit interchange fees for online transactions by 10 basis points.
Furthermore, the agreement between the two card giants also entails free access to online fraud and cybersecurity resources to help small businesses grow their online sales to prevent fraud and chargebacks.
Interchange fees are often the highest fees associated with using card service providers such as Mastercard and Visa. The Canadian government states that this new deal will help more than 90% of credit card-accepting businesses qualify for lower rates and reduce interchange fees by up to 27%.
Canadian businesses will also be able to save up to $1bn in total over the next five years as a result of saving more from lower interchange rates.
Rechie Valdez, Minister of Small Business, said: “This is great news for Canadian small businesses across the country, which will collectively stand to benefit from savings of about $1bn over the next five years.
“With these new agreements in place, our government is following through on our commitment to support small businesses that are facing higher costs because of inflation and increased interest rates.
“Reducing costs on small businesses will enable them to further invest in their business and its growth, while helping support their success now and into the future.”
In order to qualify, small businesses with an annual Visa sales volume below $300,000 will be eligible for the lower interchange fee rate. Businesses with an annual Mastercard sales volume of $175,000 will also be eligible.
As part of the new agreement with Visa and Mastercard, Canada’s large banks will also benefit from a rewards points system that will gain further protection.
The government confirmed that the new rates will come into effect in the ‘fall of 2024’.