Credit card firms to trim merchant fees, but retailers group ‘underwhelmed’

Feds expect move will help small and medium-sized companies save a total of $250 million per year

The federal government says credit card companies have agreed to trim the fees they charge the country’s businesses by 10 basis points.

Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, Mastercard and American Express that the feds expect will help small and medium-sized companies save a total of $250 million per year.

Starting in 2020, Visa and Mastercard will reduce the fees they collect from businesses to an average annual effective rate of 1.4 per cent — down from 1.5 per cent — and narrow the gap between the highest and lowest rates they charge retailers. American Express has agreed to provide more fairness and transparency as part of a separate voluntary commitment that recognizes its unique business model.

But a spokesman for the Retail Council of Canada said he was “underwhelmed” by the scope of the expected change because it would amount to just $100 worth of savings for businesses for every $100,000 worth of credit-card sales.

“In the sense that the trajectory is in the right direction, that part’s good,” said Karl Littler, vice-president of public affairs.

“We see this as a pretty small step relative to what might have been done.”

Littler said there are far lower interchange rates in many other jurisdictions around the world.

The changes, which the government says could help consumers, were unveiled at a Farm Boy grocery store in Ottawa by Finance Minister Bill Morneau and Mary Ng, the new minister for small business and export promotion.

The government says the reductions could help smaller businesses save thousands of dollars over the five-year period — and it is hoping the extra funds will encourage owners to invest, expand and create jobs.

Ottawa expects the lower interchange rates will enable smaller firms to avoid being at a big competitive disadvantage compared to larger companies, which have more leverage in negotiating with credit card firms for reduced fees.

The government also expects consumers to benefit from the changes because the lower costs to businesses will enable them to keep prices lower.

In November 2014, Visa and Mastercard voluntarily agreed to reduce their average effective fees to 1.5 per cent over five years — a period that began in April 2015.

Morneau announced in September 2016 that an independent audit found that the companies had met their respective commitments. At the time, the government also said it would conduct a review to ensure there was adequate competition and transparency for businesses and consumers when it comes to credit card fees.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Slocan Valley to be ‘lit up’ with high-speed internet in 12 months

125 kilometres of fibre-optic cable to be laid from Nakusp to Playmore Junction

Nakusp’s new Caribou Society wants a say in management of animals

Community input is necessary for effective protection, say proponents

Paramedics union raises alarm over spike in out-of-service ambulances

Staffing shortages affecting service levels in Kootenays

Update: Car located in Pend d’Oreille River, teenagers remain missing

A fundraiser has been set up at Kootenay Savings in Fruitvale to help support the family

Two missing in Pend d’Oreille crash

A 15-year-old male and 18-year-old female both from Fruitvale are missing and presumed deceased

Sparks fly as SUV speeds down wrong side of Highway 1 trying to flee RCMP

Captured on video, the vehicle headed westbound against oncoming traffic before crashing

Fundraising campaign launched for man caught in SilverStar avalanche

In only two days, the GoFundMe surpassed its $15,000 goal

Terror at sea: Helicopter rescues frightened cruise passengers in Norway

The Viking Sky cruise ship was carrying 1,300 passengers and crew when it experienced engine trouble

Search and rescue team helicopters injured climber from B.C. provincial park

A 30-year-old woman suffered a suspected lower-limb fracture in Skaha Bluffs Provincial Park

DOJ: Trump campaign did not co-ordinate with Russia in 2016

Attorney General William Barr said special counsel “does not exonerate” Trump of obstructing justice

Trudeau in Vancouver to support Tamara Taggart at Liberal nomination event

The former broadcaster is seeking the nomination for the Vancouver Kingsway riding

Trudeau calls May 6 byelection for B.C. riding of Nanaimo-Ladysmith

The riding opened up when Sheila Malcolmson resigned in January

B.C. VIEWS: The hijacking of our education system gathers speed

Children taught to strike and shout fringe far-left demands

Judges on Twitter? Ethical guidance for those on the bench under review

Canadian judges involvement in community life are among issues under review

Most Read