Credit cards and your business: new rate reductions in effect

Credit cards may be handy for customers—but expensive for merchants like you. A long history of rising costs made this issue top of mind for you, and CFIB has been on your side.

For years, we have been a powerful force in negotiating with government and the credit card industry to ensure independent businesses like yours get a fair shake on payment processing.

In more than a decade of fighting, we have achieved several crucial victories for you:

• Lower fees from Visa and Mastercard
• A code of conduct that gives you more power with payment processors
• Protection of Canada’s low-cost Interac debit system
• Exclusive low rates for CFIB members with Chase and American Express
• The ability to surcharge (coming soon) for premium cards

We’ve made progress, but the fight isn’t over. Credit cards remain a concern for you, so we will keep the pressure on to make sure that big corporations treat small businesses fairly and transparently.

Lower fees

As of July 2020, credit card fees decreased again on most transactions! Visa enacted their fee reductions on July 17, and Mastercard's changes came into effect on August 1. 

This is great news for independent merchants like you. It’s part of a broader push by CFIB to ensure credit card processing fees are fairer and more transparent for small businesses. 

While the rate reductions are good news indeed, you should still be cautious. The only way CFIB can ensure you are getting 100% of the new savings is your business is using CFIB’s member exclusive pricing from Chase. Other processors may not pass the entire savings onto their clients, or may claw back some of your savings with hidden fees.

The cuts in 2020 follow the reduction and five-year freeze that Visa and Mastercard implemented in April 2015 – the first-ever reduction, coming after years of negotiation! 

CFIB played a key part in making this happen. Together with our members, we spent years calling on the federal government, the credit card companies and the banks to address this significant cost. This happened due to the support of small business owners from coast to coast.

Please be careful

While all merchants should now see additional savings, it is extremely important that you take care to ensure you get the best rates possible. 

• You can expect to get even more calls from card processors asking for your business. If rates look too good to be true, trust your judgement or call us for advice (see our tips on choosing a processor).
• There are new fees that we are watching carefully, including a new Mastercard fee for returns and pre-authorizations. If these are significant areas of concern, please let us know as we are pushing back against any new costs.
• Check your statements to ensure you see your rates come down. If you are not seeing savings, you should contact your processor immediately or consider a new one, such as CFIB’s exclusive program with Chase.

CFIB’s credit card advocacy continues

Even with these new savings, CFIB continues to push for improved fairness to merchants. In fact, as part of the 2019 election campaign, CFIB called on all parties for further action on these costs. We are pleased to report that the Liberal Party adopted one of CFIB’s long-standing recommendations, to end processing fees on sales taxes. The Liberals directly quoted CFIB’s advice, which estimates that this move could save merchants up to $500 million per year.

While merchants understand that reasonable fees for accepting credit card payments on their goods and services are needed, it make no sense that merchants should be forced to eat the processing fees on the sales taxes that they remit to government. Given the recent election of a minority government, CFIB will be calling on all parties to support an early adoption of the Prime Minister’s new commitment to small business. 

How to save

To get the most out of our fight for credit-card fairness:

• Get the full benefit of lower rates, and exclusive pricing on American Express, with Chase^® Payment Solutions.

Here to help

The Code of Conduct gives you more power when dealing with payment processors—but it’s not a guarantee that you’ll be treated well all the time.

CFIB’s business counsellors have resources you can consult if you’re having problems dealing with credit cards:

• Choosing a payment processor
• How to handle credit card processor conduct & complaints
  
  

Code of Conduct : Thanks in large part to our work on your behalf, Canada implemented a Code of Conduct for the payment card industry in 2010, and updated it in 2015. The code saved Canada's low-cost debit system and, for the first time ever, provided merchants with some power in their relationship with the credit card industry.

CFIB and its members have used the Code to resolve issues on exit penalties for fee changes in processing agreements, debit cards for e-commerce, and better disclosure in contracts and statements.

We work closely with the government and agencies like the Financial Consumer Agency of Canada (FCAC) to ensure the Code of Conduct achieves its main objective, which is to protect consumers and merchants.

The power to charge more on premium cards : As part of a legal settlement in 2017, Visa and Mastercard announced that they would allow merchants to apply some surcharges to credit card transactions (the date hasn’t been announced yet). This comes after years of CFIB calling for the industry to let you address rising costs.
Full details are not yet available, but we expect you will be able to:

• Apply a charge of up to 2.5% or the cost of accepting the card;
• Apply the charge on either brand, or just higher-cost premium cards.

If you choose to apply surcharges, you will need to:

• Notify your card processor;
• Tell your customers at the point of sale and on receipts.

We recognize that most merchants will not add credit card surcharges, because they do not want to risk losing the sale or customer.

However, the power to surcharge is important as it will allow merchants, individually and collectively, to push back if the industry tries to implement more fee hikes. Also, in some industries (such as B2B enterprises), a credit card surcharge may be helpful in responding to a request to put a large purchase on a card. CFIB will keep you posted on when you will have the ability to surcharge, if it makes sense for your business.