#Canadian Credit Card Surcharge Rules

[debitmachinealberta]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[london-ont-debit-machine]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[debitmachinecanada]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[edmontondebitmachine]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[canadian-tax-refund]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[lucidpayments]

Feds Finally Reach Deal With Visa and Mastercard to Lower Interchange Fees for Small Businesses in Canada

For many years, Canadian merchants have been forced to pay some of the highest interchange fees in the world.

According to a Bank of Canada report, in 2018 alone, Canadian merchants paid more than $11 billion for the privilege of accepting credit card payments.

But a new agreement between Visa, Mastercard, and the federal government aims to provide some relief for small business owners.

Merchants in Canada have been fighting this battle for many years now, dealing with not only the credit card companies and banks who’ve been gouging them, but also unscrupulous payment processors who’ve been taking advantage in any way they can.

Last year, we saw a small victory, stemming from a class action lawsuit that started more than a decade ago, back in 2010.

The lawsuit alleged that Visa, Mastercard, and certain banks “conspired to set higher interchange fees and to impose rules restricting merchants’ ability to surcharge or refuse higher cost Visa and Mastercard credit cards.”

And although the banks and credit card companies named in the lawsuit refused to admit any wrongdoing, they agreed to pay $131 million in settlements, allowing some Canadian merchants to claim a rebate, with the ability to submit claims expiring in September of last year.

The settlement also included a provision that gives Canadian merchants the option to impose a surcharge on credit card transactions, starting in October of last year, although to the best of our knowledge, this function still doesn’t seem to have been rolled out on most payment terminals.

In any case, many countries have decided to regulate interchange fees, in order to keep them at more reasonable levels, but for whatever reason, the Canadian government has shied away from doing this, instead spending several years trying to come to an agreement with Visa and Mastercard.

Back in 2020, the government got them to agree to bring interchange fees down by a measly 0.1 per cent, and in the feds’ 2022 fall economic statement, the government even claimed that it had draft legislation ready to go in case it felt the need to regulate these fees, but that still hasn’t happened.

Then, last month, the federal government published a press release, stating that they’d reached agreements with Visa and Mastercard that are “expected to save eligible Canadian small businesses about $1 billion over five years.”

But what exactly did Visa and Mastercard agree to? What are the stipulations surrounding these savings? And how is this going to affect your business?

If you find yourself asking these kinds of questions, and you’re wondering if your business will qualify for a reduction in interchange fees, then you’ve got to keep reading.

Because in this article, we’re going to summarize the details of these agreements, look at how this is going to affect small business owners in Canada, explain how you can ensure these savings will be reflected on your statement, and offer our take on this issue, as well.

And if you want to learn more about how this has been playing out over the last several years, you can check out our article, which asks the question, Is the Canadian Government Really Going to Regulate Interchange Fees?

How Will These Agreements Affect Interchange Fees for Small Business Owners?

According to Canada’s Department of Finance, these new agreements will allow more than 90 per cent of credit card-accepting businesses to qualify for lower interchange rates, reducing the fees they pay by up to 27 per cent.

Businesses with annual Visa sales volume of less than $300,000 will qualify for lower interchange fees from Visa, businesses with annual Mastercard sales volume of less than $175,000 will be eligible for lower interchange fees from Mastercard, and non-profits with transaction volumes below these thresholds will also be able to qualify for reduced interchange fees.

Those who qualify will benefit from lower interchange fees on domestic in-store transactions, with a new annual weighted average interchange rate of 0.95 per cent, along with a reduction of 10 basis points on interchange fees for domestic online transactions, which could result in savings of up to seven per cent.

Visa and Mastercard have also agreed to “provide free access to online fraud and cyber security resources to help small businesses grow their online sales while preventing fraud and chargebacks.”

In addition, as part of these agreements with Visa and Mastercard, Canada’s large banks have agreed to protect the reward points of Canadian consumers, despite these reductions in interchange fees.

These changes will come into effect in the fall of next year, in order to provide time to “complete the required system updates.”

Our Take on These Agreements With Visa and Mastercard

It’s great to see that small business owners in Canada will finally be getting some relief from the exorbitant interchange fees they’ve been paying for so many years.

According to both Visa and Mastercard, the average interchange rate paid on their cards in Canada is 1.4 per cent, which means that on average, for every $100 spent using these cards, a Canadian merchant will pay $1.40 in interchange fees.

That may not sound like a lot, but when you’re accepting a lot of credit card payments, these fees can quickly add up.

That being said, cutting that number down to 0.95 per cent can actually provide significant savings for small business owners.

But considering the fact that Canadian merchants paid more than $11 billion in fees for credit card processing in just a single year, saving $1 billion over five years is arguably just a drop in the bucket, so it would have been nice to see a larger reduction in fees for small business owners.

Nevertheless, this will save small businesses some money on interchange fees, and from our point of view, that’s always a good thing.

However, the statement released by the feds also included a couple of questionable clauses about the government’s “expectations” that we’d like to address, as they definitely need to be put into perspective.

For example, the statement said that “the government’s expectation is that commitments by credit card networks to lower interchange fees for small businesses will not adversely impact interchange fees paid by other businesses,” but it’s important to point out that this is simply an expectation, and not part of the agreement between these credit card companies and the federal government.

That being said, it’s yet to be seen whether Visa and Mastercard will simply download these reductions in fees onto the bills of bigger businesses, and unfortunately, nothing would surprise us at this point.

At the same time, the statement also said that the government “expects other credit card companies to take similar actions to lower fees for small businesses, and that payment processors will pass these reductions on to small businesses,” but there are so many things wrong with this statement, we’re not even sure where to begin.

First of all, the idea that other credit card companies will follow suit when they don’t even have an agreement with the government is laughable.

The government’s expectations do not constitute an agreement, so there’s really no reason for other credit card companies to do anything at this point.

Moreover, the expectation that “payment processors will pass these reductions on to small businesses” is even more absurd, as we know this is not typically how things work in our industry.

Although this is something we’re vehemently against, and would never do ourselves, many payment processing companies will use any reduction in interchange fees as an excuse to pad business owners’ bills with “miscellaneous” fees, rather than passing those savings on to their customers.

All things considered, the government’s “expectations” are nothing more than that, and so long as they don’t have agreements with these other companies, there’s no reason to believe that they’ll do what the government expects them to do.

How You Can Ensure Your Payment Processor Is Passing These Savings on to You

As we’ve already mentioned many times before, when credit card companies reduce their interchange rates, payment processors are notorious for refusing to pass these savings on to their customers.

And unfortunately, despite the federal government’s expectations, we have no reason to believe this won’t continue to be the case when these reductions come into effect.

So, if you want to ensure your payment processor is actually passing these savings on to you, there are a few things you can do.

According to the feds, “Small businesses will qualify with each credit card network individually” for these reduced rates, so it’s not quite clear how this is going to work.

Will anyone below the thresholds in question automatically qualify, without having to apply? Or will merchants have to go through an application process before they can access these savings?

At this point, no one knows for sure, but you’ll want to stay tuned to our blog and newsletter because when we do get the details, you can be sure we’ll pass them on to you.

But it’s important to remember that these changes won’t come into effect for more than a year, so in the meantime, you should make sure to stay on top of this stuff yourself, especially as we get closer to the fall of 2024.

Then, once you’ve got those details, make sure to go through any necessary application processes as soon as you possibly can, so you don’t miss out on any of these savings.

In addition, once these rate reductions come into effect, make sure to pay close attention to your monthly bills because if you’re accepting Visa and Mastercard payments, there should be savings reflected on your statement.

This isn’t always going to be true, depending on how your volume fluctuates from month to month, but most eligible business owners should notice a difference.

And if you don’t see any difference once this comes into effect, more than likely, your payment processor has taken the opportunity to pad your bill with extra fees, so make sure to pay close attention to all the fees on your statement, as well.

Alternatively, you could try to figure out how to do all the calculations yourself to be sure of exactly what you should be saving, but that process can be incredibly convoluted, not least because payment processing companies tend to structure their statements so that it’s really hard for merchants to do that.

At any rate, once this goes into effect, if you’re not quite sure what to do, we’ll be more than happy to go through your statement with you and help you figure it all out.

And who knows? We might be able to give you a better deal, regardless of whether these savings end up being reflected on your bill or not.

Are you tired of paying so much for your payment processing? Give us a call today to find out how much we can help you save.

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Nearly 1-in-5 merchants considering credit card surcharge ahead of new rules: survey

Nearly 1-in-5 merchants considering credit card surcharge ahead of new rules: survey

A new survey from the Canadian Federation of Independent Business (CFIB) says 19 per cent of small businesses are considering adding a surcharge on credit card transactions to offset processing fees, while most remain on the fence for fear of losing customers. Source: CP24 Nearly 1-in-5 merchants considering credit card surcharge ahead of new rules: survey

[debitmachinecanada]

Canadian Credit Card Surcharge Rules

Q. What is the process that a merchant must follow in order to surcharge Visa credit cards? A. A merchant that chooses to apply a surcharge to consumers who pay with Visa credit cards must: • provide it’s acquirer with a minimum of thirty (30) days advance written notice of it’s intention to surcharge • disclose it’s surcharging practices to cardholder at the point of interaction (POI) and on the…

[lucidpayments]

You May Be Eligible for an Interchange Fee Rebate from this Credit Card Class Action Settlement

Business owners in Canada pay some of the highest interchange fees in the world.

And as part of our commitment to doing what’s best for business owners, we want to do whatever we can to help them save money on the cost of payment processing.

That being said, we think it’s important to make business owners aware of a recent credit card class action settlement from which they may be eligible for a rebate on their interchange fees.

It’s not much, considering how much Canadian business owners have to pay to accept payments with credit cards, but still, every little bit counts.

So, if you’re tired of paying interchange fees, and you’d like to recoup some of what you’ve paid over the years, then you’re going to want to keep reading.

Because in this article, we’re going to discuss the details of this credit card class action settlement, and let you know how you can go about applying for a rebate on your interchange fees.

If you aren’t sure what interchange fees are, or you just want to learn more about them, you should check out our article on What You Need to Know About Interchange Rates in Canada.

Why Are These Interchange Fee Rebates Being Offered?

These interchange fee rebates come as a result of a class action lawsuit that commenced more than a decade ago, in 2010.

According to a press release published at the end of May, this class action alleges that Visa, Mastercard, and certain banks “conspired to set higher interchange fees and to impose rules restricting merchants’ ability to surcharge or refuse higher cost Visa and Mastercard credit cards,” like the rewards cards that have become so popular in recent years.

Now, it’s important to point out that the credit card companies and banks named in the lawsuit have not admitted any wrongdoing or liability, but from our point of view, it’s obvious that they’re trying to save face with these settlements.

Because whether they have liability or not, the cost to accept payments with credit cards has skyrocketed, and it’s becoming increasingly unaffordable, especially for small business owners.

In any case, as a result of this class action, settlements totalling $131 million have been reached with Visa, Mastercard, and several banks, including Bank of Nova Scotia, BMO, CIBC, Royal Bank, and TD.

At the same time, this settlement also gives Canadian merchants the option to pass the cost of interchange fees onto customers by imposing a surcharge on credit card transactions, starting in October.

Merchants can enact a surcharge for whatever Visa and Mastercard credit cards they choose, up to a maximum of 2.4 per cent.

However, in Quebec, the provincial Consumer Protection Act prevents business owners from imposing these kinds of surcharges on customers.

How Can I Apply for an Interchange Fee Rebate?

If your business accepted payments from Visa or Mastercard credit cards at any time between March 23, 2001, and September 2, 2021, you could qualify to receive a portion of this settlement.

Businesses that had an average annual revenue of less than $5 million during the claim period are eligible to receive up to $600, while businesses that had an average annual revenue of $5 million or more during the claim period are eligible to receive up to $5,000.

If your business had an average annual revenue of less than $5 million, you can simply fill out the online claim form, and you don’t even have to provide documentation to prove you paid the interchange fees.

However, there is no way to appeal these undocumented claims. An appeal process is only available for businesses that submit a documented claim and had an average annual revenue of $5 million or more.

In any case, the undocumented claim process is pretty straightforward, and it only requires you to provide your name, contact information, annual revenues during the claim period, and an attestation that you collected credit card payments at some time after March 23, 2001.

It’s also important to point out that there is no cost for submitting your claim, and even if your business is now closed, you may still be eligible to claim money from this settlement.

The deadline to submit a claim is September 30, 2022, and claimants are supposed to receive their payments some time before the end of 2022.

If you want to learn more, the Canadian Federation of Independent Business has a handy little websitethat will tell you everything you need to know. And if you want to file a claim, click here.

What Does This Mean for Canadian Business Owners?

This settlement is a huge win for Canadian business owners, and not just because of the rebates.

Having the ability to impose surcharges gives them greater control over what fees they choose to pay when accepting payments with credit cards.

More importantly, this is just one more indication that thankfully, the relationships between merchants, banks, and credit card companies are improving, and the cost to accept payments with credit cards is going down, as well.

The olive branch extended by this settlement is definitely proof of that, at least from our point of view.

That being said, imposing surcharges on customers is going to be a very awkward balancing act for merchants, and many of them will choose not to do this for fear of alienating their customers.

Certainly, this is going to affect the big corporations much differently than small businesses, just based on the vast differences in terms of volume of sales.

In any case, being able to download interchange fees onto customers is going to affect each industry and business in a unique way, and some will be more likely to do this than others.

For example, when it comes to businesses that do mostly debit sales, it’s not going to make much of a difference.

And for businesses that accept tips, such as restaurants or salons, it’ll probably be easier to impose a surcharge, as most people give 10 or 15 per cent for a tip anyway, so what’s another two per cent?

However, for businesses that sell higher-ticket items, it’s going to be a lot more difficult to justify, as the larger the transaction, the more expensive the surcharge will be.

At the end of the day, we think this is a good thing, as it gives merchants more autonomy, flexibility, and control.

But ultimately, business owners will have to decide for themselves where to draw the line between trying to recoup some of these interchange fees and taking the risk of possibly angering their customers.

Do you want to impose a surcharge on customers who pay with credit cards?

Are you unsure of how to go about doing this?

If you’re looking for advice on how to structure your surcharges, give us a call. We’ll look at your statement to find out where you’re spending the most, help you determine whether it’s worth it, and work with you to create a customized surcharge solution that best fits your business model.