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.
Sources:
https://www.cbc.ca/news/business/credit-card-fees-1.6470952
https://globalnews.ca/news/8880158/canada-businesses-rebates-mastercard-visa-settlement/
https://www.thestar.com/business/2022/05/30/canadian-merchants-eligible-to-claim-rebates-after-settlement-with-visa-mastercard.html