Mr. Speaker, in budget 2023, the government announced that it had secured agreements with Visa and Mastercard to lower credit card transaction fees for small businesses, while also protecting reward points for Canadian consumers offered by Canada's large banks, fulfilling commitments expressed in budget 2021, budget 2022 and the 2022 fall economic statement.
The government announced further details on the agreements on May 18, including the eligibility criteria for receiving lower rates with each network.
For qualifying small businesses, Visa and Mastercard have agreed to reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95%; reduce domestic consumer credit interchange fees for online transactions by 10 basis points, resulting in reductions of up to 7%; and provide free access to online fraud and cybersecurity resources to help small businesses grow their online sales while preventing fraud and charge-backs.
Small businesses will qualify with each credit card network individually. Specifically, small businesses with annual Visa sales volume below $300,000 will qualify for the lower interchange fees from Visa, and those with annual Mastercard sales volume below $175,000 will qualify for the lower fees from Mastercard.
It is estimated that more than 90% of credit card-accepting businesses in Canada will qualify for lower rates and see their interchange fees reduced by up to 27% from the existing weighted average rate.
In working towards the agreements, the government engaged with the credit card industry and businesses through a combination of in-person and virtual meetings, calls, and other exchanges. The comprehensive engagement approach included several touchpoints with small and medium-sized business groups, credit card networks, financial institutions and their industry association, acquirers, payment processors and external reward programs.
The government expects other credit card companies, such as American Express, to take similar actions to lower fees for small businesses.
Interac is a low-cost debit network and does not facilitate credit card transactions.