Canadian Merchants May Get Rebates After Fee Settlement with Visa, MasterCard Deal

Businesses in Canada might be eligible to claim credit card processing fee rebates after a multimillion-dollar class-action settlement with MasterCard and Visa. The Canadian Federation of Independent Business (CFIB) stated that merchants would be able to apply for rebates on so-called swipe fees charged in credit card transactions dating back two decades.

The class action was launched in 2011, but the settlement arrived only after the pandemic quickened a shift towards digital payments as more consumers shopped online. Corinne Pohlmann, senior vice-president of national affairs and partnerships at CFIB, stated, "During COVID, cash disappeared, and everyone started paying with plastic. Credit cards became much more prevalent, so the amount of fees merchants are paying has also increased."

The Fees

Credit cards charge merchants so-called interchange rates on purchases. This fee is shared between credit card companies, payment processors, and banks. It can range from 1% on the basic card to as high as 3% for cards that offer rewards like loyalty points or cash back. Pohlmann stated, "The more perks on a card, the more expensive it is for a merchant to accept. I don't think consumers understand how big a cost it could be for a merchant."

Though the settlement won't change the fees, it will allow businesses to apply for a rebate of some of the fees paid since 2021. Any Canadian merchant who accepted MasterCard and Visa credit cards between 2001 and 2021 and incurred merchant discount fees will be eligible for a rebate. It would range from $30 a year or up to $600 for small merchants to $250 a year or $5,000 for larger merchants.

Customers Might be Charged

The settlement also allows merchants to pass the credit card fees on to customers from this fall. Though only a few merchants are expected to add surcharges for accepting credit cards, Pohlmann mentioned that giving businesses the ability to recoup those fees will help them push back against future fee hikes.

Interestingly, the federal government has repetitively pledged to lower credit card processing fees for small businesses.

Gary Sands, senior vice-president of public policy and advocacy with the Canadian Federation of Independent Grocers, said, "They've promised to reduce fees for small- and medium-sized businesses to rates that are similar to what ... big businesses enjoy. But there's been a deafening silence from Ottawa."

MasterCard will reduce credit card fees for CFIB member businesses

Small businesses need Ottawa's help to get some relief on credit card fees. Sands also mentioned that the amount being reimbursed by Visa and MasterCard just represents a tiny fraction of the fees paid. He also thinks that credit card companies could use the settlement as "camouflage in their battle to resist lowering their credit card fees." He stated, "The surcharge isn't a solution. What business is going to deliberately put themselves at a competitive disadvantage by passing those fees on to customers?"

Visa Canada and MasterCard Canada are yet to comment on this matter.



Previous Post Next Post