Shopping Discussion

Big credit card firms agree to cut merchant fees

  • Last Updated:
  • Aug 10th, 2018 12:16 pm
[OP]
Deal Addict
Jan 29, 2017
1256 posts
920 upvotes

Big credit card firms agree to cut merchant fees

The federal government is announcing today that major credit card companies have agreed to lower the fees they charge businesses.

A government source told The Canadian Press that Ottawa has reached voluntary, five-year deals with Visa, Mastercard and American Express that are expected to help small and medium-sized companies save about $250 million a year.

Starting in 2020, Visa and Mastercard will reduce the fees they collect from businesses to an average annual effective rate of 1.4 per cent — down from 1.5 per cent — and narrow the gap between the highest and lowest rates they charge retailers.

American Express has agreed to provide more fairness and transparency as part of a separate voluntary commitment that recognizes its unique business model.

The changes, which are also expected to help consumers, are being unveiled at an Ottawa grocery store later today by Finance Minister Bill Morneau and Mary Ng, the new minister for small business and export promotion.

The source, speaking on condition of anonymity to discuss matters not yet public, said the reductions could help smaller businesses save thousands of dollars over the five-year period — and the government is hoping the extra funds will encourage owners to invest, expand and create jobs.
http://www.cbc.ca/news/business/credit- ... -1.4779284

From 1.5% to 1.4% a marginal change but always something. How will this impact CC perks? Full details to be unveiled later today.
5 replies
Deal Addict
Feb 19, 2017
2635 posts
1452 upvotes
Vancouver
Doubt this will change perks all that much. The key is they really just narrow the gap for small business. Its not likely the amount wm, rcss, etc gets changed and since most of the money flow goes through those stores, the actual change on the bottom line is minimal.
Deal Addict
Jul 30, 2015
1581 posts
688 upvotes
Toronto, ON
I wonder why they are dropping it voluntarily?
Deal Addict
Mar 17, 2004
4804 posts
260 upvotes
This doesn't help consumers actually. It's not like the retailers are going to lower their prices. It only helps merchants. Card issuers have already begun to devalue some cards that give up to 2% cashback
Deal Addict
User avatar
Dec 3, 2017
1160 posts
740 upvotes
Guelph, ON
canoek wrote:
Aug 10th, 2018 10:36 am
I wonder why they are dropping it voluntarily?
Because the government was giving indications that they would force cap rates if they didn't. This is Visa and MC preventing regulation unnecessary regulation I might add. If the government capped merchant fees they should also cap monthly account and ATM fees charged to consumers, but we don't have lobbying groups like the "small" businesses do.
I like credit unions. Proud DUCA member!
Deal Addict
Jul 6, 2005
3529 posts
902 upvotes
Toronto
Oni-kun wrote:
Aug 10th, 2018 10:51 am
This doesn't help consumers actually. It's not like the retailers are going to lower their prices. It only helps merchants. Card issuers have already begun to devalue some cards that give up to 2% cashback
+1 million....

You'd have to be delusional if you think merchants are going to follow suit by lowering their prices. This just means the merchants get to pocket the difference one what was already built as a buffer into their pricing to cover fees.

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