Reduced Credit Card Transaction Fees for Small Businesses?
The Government of Canada has introduced changes that it claims will reduce credit card merchant fees by up to 27%, starting on October 19, 2024. which could result in $1 billion in savings over a five-year period. The savings are first delivered to the credit card processors by reducing Canada’s interchange fees, and the Government of Canada expects merchants to pass these savings on to small businesses.
The government mentions that a business with $300,000 in credit card sales, typically paying $4,000 in annual fees, would save $1,080/year. At Achen Henderson, our merchant fees range anywhere from 2% to 3%, meaning our fees would be more like $6,000 to $9,000 per year.
While we are excited to see the government taking action to reduce merchant fees – which are borne almost entirely by small businesses that choose not to pass such fees onto their customers (which is now legal) – we are skeptical that merchants will honor the government’s “expectation” to share the savings.
We also wonder which payment processor offers credit card payments at the government’s perceived 1.3% ($4k/$300k), because we aren’t aware of any doing this.
If you have any questions about how the carbon tax rebate may impact your small business, please do not hesitate to contact us.
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