Credit cardfirms trimmerchant fees

Major credit card companies have struck an agreement with the federal government to trim the fees they charge to merchants in amove Ottawa hopes will provide a boost to small businesses.

Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, MasterCard and American Express by about 10 basis points. Finance Minister BillMorneau, who unveiled the deal at an Ottawa grocery store, said he expects the agreements to help small and medium-sized businesses save a total of $250 million per year.

“That’s a big difference for companies,” saidMorneau, who billed the change as part of his department’s effort to listen to the concerns of Canadian business owners about staying competitive.

“Today, is one part of responding to those competitiveness challenges.”

Starting in 2020, Visa andMasterCard 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.

But some had hopedOttawa would lower the rate even further.

A spokesman for the Retail Council of Canada said he was “underwhelmed” by the scope of the expected change because it would amount to just $100 worth of savings for businesses for every $100,000 worth of credit-card sales.

“In the sense that the trajectory is in the right direction, that part’s good,” said Karl Littler, vice-president of public affairs.

“(But) we see this as a pretty small step relative to what might have been done.”

Littler said there are far lower interchange rates inmany other jurisdictions around the world.

The head of the Canadian Federation of Independent Business called the changes “positive news.”