OTTAWA – The federal government has announced a voluntary agreement by Visa and Mastercard to reduce merchant credit card fees to an average effective rate of 1.5 per cent for the next five years.
Finance Minister Joe Oliver says the reduction amounts to a 10 per cent rate cut, and that it should result in lower prices for consumers.
Some critics, however, have questioned that prediction.
Compliance with the agreements, which are expected to take effect by next April, is to be verified by an independent third party.
American Express did not submit a proposal to reduce rates as it uses a different business model than Visa and Mastercard.
The Canadian Federation of Independent Business says while the cuts are not massive, small merchants will be happy that they will see a reduction after years of spiking credit card swipe fees.
Visa and Mastercard have committed to cutting what are known as interchange fees, which are charged to merchants when a customer uses a credit card to make a purchase.
Businesses had complained the fees were continually rising, especially when their customers use so-called premium credit cards that offer reward points to cardholders.