By MorinvilleNews.com Staff
Small businesses in Canada are set to benefit from lower Visa and Mastercard fees starting this week, thanks to a new deal brokered by the federal government. However, not all payment processing companies are passing on these savings, with Stripe—a major player in the e-commerce payment processing industry—publicly stating it will not reduce its rates for merchants.
The Canadian Federation of Independent Business (CFIB), which has long advocated for reduced credit card fees, welcomed the new agreement. Under the terms of the deal, starting October 19, businesses processing less than $300,000 in annual Visa sales and $175,000 in Mastercard transactions will see fees drop by an average of 27%. In-store purchases will now incur an average interchange rate of 0.95%, while ecommerce fees will be cut by 0.1%.
“CFIB thanks Finance Minister Chrystia Freeland for her work on this important deal for small business,” said Dan Kelly, CFIB president. “Qualifying businesses could expect about $300-$400 savings per year for each $100,000 in Visa sales and about $200 in savings per year for each $100,000 in Mastercard sales.”
These savings are expected to impact over 60% of CFIB’s 97,000 members. However, CFIB’s optimism is tempered by the actions of Stripe, an international e-commerce payment processor, which plans to retain the savings for itself rather than passing them on to small business customers.
“Unfortunately, multinational e-commerce payments processor Stripe has publicly stated on its website its intent to keep rates the same, which means Stripe would keep the savings that were intended for its small business customers. It’s extremely disappointing to see a big company take this approach,” Kelly added, noting this would affect SMEs, including through its partnerships with Shopify, Lightspeed and FreshBooks. “This means they won’t get the full value of the promised savings. We expect Stripe to do better and will push for a different outcome.”
In contrast, Stripe explains on its website that despite the upcoming reduction in interchange fees for qualifying small businesses, it has faced rising network costs, including new CVV check fees and increased commercial card fees. Stripe simplifies these complexities by offering a consistent transaction fee and states that, while its own costs are increasing, it will not change its pricing for merchants.
The federal government had made clear that all members of the credit card industry were expected to pass the cost reductions on to merchants. While most major credit card processors have committed to doing so, CFIB reports that Stripe is the only company to explicitly confirm it will not lower its rates for its flagship blended rate customers.
CFIB has written to all major payment processors in Canada, requesting confirmation that the savings will be passed on. To date, companies such as Chase Merchant Services, Global Payments Inc., Moneris Solutions, Square Inc., and TD Bank Merchant Services have made public commitments to do so. Others, including Elavon, Fiserv, and Peoples Trust, have yet to clarify their positions.
“We will be monitoring all credit card processors to ensure they keep their side of the bargain,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. “CFIB will ask its members and all small businesses to report any instances where the savings have not been fully passed on.” Businesses can contact CFIB by emailing ccRates@cfib.ca.
In the meantime, CFIB continues to push for broader eligibility for the reduced fees, including expanding the thresholds to cover more businesses and credit card providers.
