Visa Canada Corp. and MasterCard Inc. have both submitted proposals to the Canadian government stating that they will reduce the fees they charge merchants to an average effective rate of 1.5 percent over the next five years.
Those fees are in the range of 1.5 and 3 percent (depending on the type of card). The fees add between 5 to $7-billion to the prices of goods and services.
For small businesses that can add up to thousands per month. The owner of a small pizzeria, Habib Hashemi, whose business is based Ottawa, told CTV News:
“We’re only a small business, we’re not making tons of money.”
In total it costs Hashemi $3,600 per month for costs associated with customers using Visa and Mastercard.
“We pay all these fees and there’s nothing left for us.”
Finance Minister, Joe Oliver, was happy with the proposals, saying that a 10 percent cut in credit card fees will “ultimately result in lower prices for consumers.”
“These commitments represent a meaningful long-term reduction in costs for merchants that should ultimately result in lower prices for consumers,”
“As a result of the voluntary proposals, there is no need for the government to regulate the interchange rates set by the credit-card networks.”
The Federal Competition Tribunal said that the high fees the two companies charged were anti-competitive, and should be reduced and regulated by the Canadian government.
CFIB president Dan Kelly said that this reduction in “swipe fees” should help merchants and consumers.
“Merchants have been forced to embed these rising fees in the cost of everything they sell, so reducing the cost pressure should help small businesses keep prices down,”