Visa will lower credit card interchange rates for more small businesses in Canada starting Oct. 24, but new transaction fees planned by the payments company and Mastercard could offset some of the savings, according to the Canadian Federation of Independent Business.
The changes will expand Visa’s small merchant program to businesses with up to $750,000 in annual Visa sales, while reducing rates for all businesses that qualify. Mastercard’s program will remain limited to businesses with annual sales below $175,000.
The CFIB said the expanded eligibility will allow additional small businesses to access lower processing rates under an agreement Visa and Mastercard reached with the federal government in 2024.
“This is a big win for many small businesses that will now qualify for Visa's special, lower interchange rate. The additional businesses that now qualify for the small merchant program will save thousands each year,” said Dan Kelly, CFIB President.
New transaction fees raise concerns
Despite the lower interchange rates, the CFIB is raising concerns about new fees that Visa and Mastercard plan to introduce on domestic credit card transactions.
Mastercard will expand a fee of 1.8 cents US per transaction to all transactions starting this week, while Visa intends to introduce the same fee in April 2027. The fees are initially charged to card processors, but the CFIB said they are routinely passed on to small merchants.
“Sadly, there are new credit card processing fees on the horizon as well,” Kelly added.
The organization said the new charges could increase costs for small businesses even as interchange fees decline. Interchange fees are charged whenever a customer pays by credit card and are paid to the financial institution that issued the card, with the amount calculated as a percentage of the sale.
The CFIB said the planned transaction fees represent a separate source of revenue for the payment networks and could reduce the benefit businesses receive from lower interchange rates.
"After reducing credit card interchange fee revenue that goes to the bank, it is disappointing to see Visa and Mastercard increase their own slice of the payment fees that may end up being paid by small businesses," noted Corinne Pohlmann, CFIB's executive vice-president of advocacy.
Visa expands eligibility threshold
Under the existing small merchant programs established through the 2024 agreement with the federal government, Visa offered reduced interchange rates to businesses with annual sales below $300,000, while Mastercard's threshold was $175,000.
Visa's new $750,000 annual sales threshold will bring more merchants into its program. The company is also lowering rates for all businesses that meet its eligibility requirements, according to the CFIB.
Mastercard is not expanding its small merchant program, leaving its existing sales threshold unchanged.
The CFIB said it wants the federal government and payments industry to extend lower small business rates to additional credit card providers, review eligibility thresholds regularly and ensure that savings are passed on to merchants.
The organization has continued to advocate for changes to credit card processing costs, arguing that small businesses should benefit from lower fees across payment networks rather than relying on adjustments from individual providers.
CFIB calls for broader industry changes
The CFIB said it will continue pressing the government and payments industry to broaden access to reduced processing rates and address the impact of additional transaction fees.
"For two decades, CFIB has been pushing for fairer credit card fees for small businesses. We're glad to see Visa include more small merchants, and we are calling on Mastercard and other card brands to do the same," said Pohlmann.
For more information on CFIB's work to reduce credit card fees for small businesses, visit cfib.ca/credit-cards.
The Canadian Federation of Independent Business describes itself as Canada's largest association of small and medium-sized businesses, with 103,000 members across industries and regions. Its work includes advocating for policy changes at all levels of government, providing business advice and tools, and negotiating savings for members.