After a long, hard-fought campaign by RCC members, retailers are today seeing a reversal and cap in the fees that merchants are charged for accepting credit cards.

  • Earlier this morning, the Government of Canada announced that agreements have been reached with both Visa and MasterCard to reduce their respective interchange rates on consumer credit cards from current levels to an average of 1.50%.
  • These reductions will initially be for a period of five years, commencing April 30, 2015.
  • For Visa, this means a 7% reduction in its current average rate (down from 1.61%).
  • For MasterCard, this means a 14% reduction in its current average rate (down from 1.74%).
  • The government has announced these two agreements, taken together, as being a 10% reduction, whereas RCC calculates its overall impact as a 9.3% reduction from current levels.
  • In order to achieve these reduced numbers, both MasterCard and Visa will have to reduce pricing on some of their core products and though RCC does not yet have formal confirmation, we expect to see reduced rates on premium cards.
  • Because MasterCard has to reduce fees twice as deeply as Visa, it will, in addition to reductions on some of its core products, offer incentives for certain types of small and mid-sized merchants.  The bulk of its reductions will still come from MasterCard’s core products.
  • More detail on precisely which products are being reduced will be forthcoming from the networks over the next week to two weeks.An independent auditor will ensure that each network complies with the new 1.5% benchmark rate.
  • The government will take the steps necessary to ensure that acquirers pass on these fee reductions, whether by mandating that network rules must require processors to pass on the fee reductions and/or allowing merchants to cancel acquirer contracts without penalty where said acquirer does not pass on the full fee reduction.
  • The government has made it clear that non-compliance by the networks will likely lead to regulation.
  • RCC welcomes this important step toward making interchange rates more competitive, a move that will benefit both retailers and Canadian consumers.
  • The Government deserves credit for meeting its Budget 2014 commitment to working with stakeholders to reduce the costs of credit card acceptance.
  • While an important step, these fees still remain too high when compared to other countries around the World and RCC will continue to press for further, deeper reductions in these fees.

For further detail, please contact Karl Littler, Vice President, Provincial GR & Strategic Issues at 416-467-3783 I Mobile: 416-906-0040 I [email protected]