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Canada’s federal government has announced that it will be taking action to mediate a rising issue between Canada’s biggest credit card companies and the merchants they serve.

In November 2014, Visa and MasterCard were asked by the federal government to lower fees charged to those who host their services. The companies were told to produce proof of compliance within two years’ time, or face the possibility of the government taking over and setting rates.

Now, both companies have put out releases saying their audits show them to be in compliance. However, neither has released the audits to the public.

As a result, finance minister Bill Morneau says the government will conduct further assessment of these merchant fees charged by credit card networks, and review any effects from the fee reductions. However, the timeline in which they plan to conduct the assessment is unclear.

Canada’s Interchange Fees among Highest in World

Interchange fees – also commonly called merchant fees – are not seen by the consumer. These fees are absorbed by any place of business that allows its customers to pay with Visa, MasterCard or any other credit card (for example, a store or restaurant).

While these costs aren’t supposed to be passed onto the consumer, Canadians may be paying them without knowing. Simply put, these fees increase the cost of doing business, causing business-owners to bump up the price of their items or services to compensate.

A Visa spokesperson tells the Toronto Star that the average interchange fee per merchant between April 30th 2015 and April 30th 2016 was 1.5183%. Meantime, a MasterCard spokesperson says its net interchange rate over that same time period was 1.5187% – a 1% reduction year-to-date – and fees were lowered once again this June.

Critics says Canadian merchants pay some of the highest interchange fees in the world – an estimated $5-$7-billion dollars annually. In contrast, Australia has legally set interchange fees for all credit card companies at no more than 0.5%, while the limit is 0.3% in the European Union.

Critics and organizations representing merchants say even if Visa and MasterCard released their audits, any reductions that have been made in Canada still aren’t enough to help businesses and consumers.

The Walmart-Visa Fallout Continues

Back in June, Walmart announced it would stop accepting Visa cards in its Canadian stores starting in July in Thunder Bay, Ont. Since then, the retailer has announced all 16 stores in Manitoba will stop accepting Visa as of October 24th.

Walmart claims that the interchange fee for hosting Visa is too high and they can’t continue to pass on significant discounts to their customers unless they no longer take the card.

All along – and now – Visa says it remains committed to resolving the issue with Walmart. But Walmart says despite the finance minister’s decision to assess the fees, it won’t change its mind.

What can You do, as a Consumer?

Besides only using cash – which doesn’t come with the many benefits of using a credit card – you can always speak out if you feel your wallet is being gauged. Don’t be afraid to ask retailers questions if you feel those interchange fees are being passed on to you (even though they shouldn’t be). There’s also no reason why you can’t reach out to your local MP or MPP and express your concerns.

And never be afraid to check out your options. Perhaps it’s time to switch credit cards or use your debit card from time to time. The more you stay informed, the smarter a consumer you will be.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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