Canada's small- and medium-sized businesses create good-paying jobs, keep main streets flourishing across the country, and deliver the dream of entrepreneurship. It is essential that these businesses thrive so they can continue being the bedrock of our communities and our economy.
Small businesses pay fees to process credit card transactions, with the largest component being the interchange fee paid to credit card-issuing financial institutions, such as banks. That is why the federal government negotiated and finalized new agreements with Visa and Mastercard, which also protect reward points offered to Canadians.
Today in Hamilton, the Honourable Filomena Tassi, Minister responsible for the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), announced that new credit card fee reductions for small business owners will come into effect this Saturday, October 19, 2024. For qualifying small businesses, Visa and Mastercard have agreed to:
- reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95 per cent;
- reduce domestic consumer credit interchange fees for online transactions by 10 basis points, resulting in reductions of up to 7 per cent; and,
- provide free access to online fraud and cyber security resources to help small businesses grow their online sales while preventing fraud and chargebacks.
More than 90 per cent of businesses that accept credit cards will receive lower rates and see interchange fees reduced by up to 27 per cent. These fee reductions will save eligible small businesses about $1 billion over five years.
Reduced credit card transaction fees will save small businesses thousands of dollars every year. For example, if a store processes $300,000 in credit card payments, they currently pay nearly $4,000 in annual interchange fees. With these new agreements, the store could save $1,080 in fees every year. The federal government expects all members of the credit card industry, including payment processors, to pass these savings on directly to small businesses.
Second, the federal government announced a revised Code of Conduct for the Payment Card Industry in Canada to protect over 1 million businesses that accept credit card and debit card payments from customers. Starting on October 30, 2024, the revised Code will help businesses compare prices and offers from different payment processors, and shorten the complaint handling response time by nearly 80 per cent to just 20 business days. All major payment card network operators in Canada have agreed to the terms of the revised Code. Certain obligations requiring complex or technical system changes will come into effect by April 30, 2025.
In addition, the federal government announced the payment amounts for the new Canada Carbon Rebate for Small Businesses, which will deliver over $2.5 billion to about 600,000 Canadian businesses before the end of this year. The Canada Carbon Rebate for Small Businesses will deliver up to $4,010 to a business with 10 employees in Ontario, $59,100 to a business with 50 employees in Alberta, and $576,844 to a business with 499 employees in Saskatchewan. Small businesses in Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador will also receive payments.
The government is taking action to help small businesses start up, grow, and thrive by reducing the costs of running a business. These reduced credit card fees for small business owners build on the government's lowering of the small business tax rate to 9 per cent-which is already saving small businesses $6.6 billion every single year.
