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Credit Cards: A new era

Are merchants finally gaining ground in the push for lower credit card processing fees?


Dan Kelly

By Dan Kelly, President and CEO, Canadian Federation of Independent Business, 658 words, FINAL

About a decade ago, calls and emails from members of the Canadian Federation of Independent Business (CFIB) began to highlight an emerging issue for Canadian small and medium-sized businesses: the rising cost of credit card processing fees. For a few years, it seemed it was the only issue many of our 109,000 members wanted to talk to me about.

After a ton of research, member surveys and analysis, it was clear that the real pressure point was the waves of “premium” credit cards that were being issued by Canada’s banks. Cards, like Visa Infinite or MasterCard World were spreading quickly through the market – often to customers who had never even requested the upgrade. These cards came with a few extra points or perks for consumers, but at a significantly higher fee level for the merchants who accepted them. If a merchant wanted to accept credit cards at all (and let’s face it, few can say no), they were required to accept all cards, regardless of the cost.

There were also many other industry horror stories, including the use of deceptive practices on the part of several credit card processors. In my work leading Canada’s largest group of small business owners, I spoke to dozens of hardened entrepreneurs on the verge of tears or bankruptcy after falling victim to a scam to lock them into a terrible contract with rising fees and giant exit penalties.

This resulted in a decade long push on the part of merchants and their associations for fairness in the payments industry. There were several approaches taken to address the challenge, ranging from requests for government to regulate the merchant cost to working to get merchants a seat at the negotiating table to improve their outcome.

Right from the start, CFIB pushed for additional powers for merchants and a light hand for government. We were ultimately successful on several counts:

  • In July of 2009, after extensive feedback from members and discussions with Visa and MasterCard, CFIB released the first public draft of a proposed code of conduct for the payments industry, to improve fairness.

  • In April of 2010, the federal government unveiled the final code of conduct, and Visa and Mastercard signed on. For the first time, the Code gave merchants some important rights in pushing back against rising costs.

  • In November 2014, CFIB joined the federal government in announcing the outcome of an important agreement on the part of Mastercard and Visa Canada to reduce rates for all merchants, and a decision to keep the average rate capped for five years.

These actions put Canadian merchants well-ahead of their US counterparts, but many merchants still regard the current rates as too high, particularly when viewed against even lower merchant fees in Europe or Australia.

Fortunately, there are recent signs that regular market forces are taking hold in the payments industry. For the first time in Canada, a card brand directly negotiated with an association to lower rates based on the aggregate volume of the business for its members.

As CFIB members collectively process over $3 billion in MasterCard sales alone through a program with Chase Paymentech, MasterCard has agreed to match the rate it had previously reserved for a handful of the largest merchants in Canada. This arrangement started April 3, 2017 and is expected to be offered by most major card processors (acquirers) across Canada, including CFIB’s important deal with Chase Paymentech.

After working with the payments industry for over a decade – with several scars to prove it – I believe that this signals a new era in the merchant/payment industry relationship. No doubt, there will be other battles ahead. But rather than simply be price-takers, I am witnessing a new spirit among merchants to work together to be price-setters. This is good news.

To learn more about the work of CFIB, visit

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