CFIB: LOWER VISA AND MASTERCARD FEES FOR SMALL BUSINESS, STRIPE NOT ON BOARD

DAN KELLY

OTTAWA – After years of advocacy work, the Canadian Federation of Independent Business (CFIB) welcomes this week’s significant reduction in Visa and Mastercard merchant fees for small businesses. But as CFIB continues its role as a watchdog for small merchants, it has learned that not all payment processing companies are planning to pass on the cost savings.

As of October 19, under the new deal between the Government of Canada and Visa and Mastercard, the cost of accepting credit cards will be reduced by an average of 27% for small businesses processing less than $300,000 in annual Visa sales and $175,000 in Mastercard transactions. Small firms will qualify for a 0.95% average interchange rate for in-store sales and see a 0.1% cut in ecommerce fees.

“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.” CFIB estimates that over 60% of its 97,000 members will qualify for the savings.

In a recent statement, the federal government made clear it expects all members of the credit card industry, including payment processors, to pass these savings on directly to small businesses.

“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.

Stripe provides services to thousands of 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,” Kelly said.

CFIB has written to all major credit card processors in Canada. Most of the major players have publicly committed to passing on the savings, while some have not confirmed their plans. To date, only Stripe has made clear it will not pass on the savings to merchants on its flagship blended rate.  

“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.

CFIB will continue to push the government to expand the size thresholds to benefit more businesses, include additional credit card providers in the agreement and ensure that the cost savings are fully passed on to merchants.

For more information on CFIB’s work to reduce credit card fees for small businesses, visit cfib.ca/credit-cards.