Photo: Mark Lennihan Archives Associated Press
From 2020, Visa and MasterCard will reduce the costs of management of the companies to a rate annual average of 1.4 % — compared to 1.5 % currently.
The federal government announced Thursday that the companies issuing credit cards had agreed to reduce the fees charged to domestic firms by 10 basis points.
Ottawa has entered into voluntary agreements of five years with a Visa, MasterCard, and American Express, which should help small and medium-sized enterprises to total savings of $ 250 million per year.
“This is a big difference for small and medium-sized enterprises “, said the minister of Finance, Bill Morneau.
From 2020, Visa and MasterCard will reduce the costs of management of the companies to a rate annual average of 1.4% — compared to 1.5% currently — and will reduce the gap between the highest and lowest charged to retailers. American Express has agreed to provide more fairness and transparency within the framework of a voluntary undertaking distinct that recognizes its business model is unique.
But a spokesman for the canadian Council of retail trade (RCC) said he is “disappointed” by the magnitude of the change expected, as it would represent a saving of $ 100 for businesses for every $ 100,000 of sales paid by credit card.
“It is good in part, in the sense that it is a step in the right direction “, said the vice-president of public affairs for the RCC, Karl Littler.
“We see this as a small step compared to what could be done. “
Mr. Littler was noted that there were interchange rates much lower in many other jurisdictions around the world.
The changes were unveiled in a grocery store in Ottawa by the minister of Finance, Bill Morneau, and the new minister of Small Business and export Promotion, Mary Ng.
The government calculates that the reductions could help small businesses save thousands of dollars over five years — and that the government hoped the additional funds would encourage the owners to invest, expand and create jobs.
Ottawa believes that lower interchange rates will allow small firms to avoid a competitive disadvantage important compared to large companies, which have more weight in the negotiation with the issuing companies of credit cards to obtain reduced fees.
The government also expects that consumers benefit from these changes because the costs are lower for companies that will keep prices down.
“SMES in several cases, I am sure, will make investment in the business and in their employees, but in other cases, it is clear that they will have the opportunity to reduce their prices,” argued the minister Morneau.
In November 2014, Visa and MasterCard have agreed voluntarily to reduce their expenses average number of employees 1.5 percent over five years, starting April 2015.
The minister Morneau announced in September 2016, that an independent audit had found that the companies had complied with their respective commitments. At the time, the government had also announced that it would conduct a review to ensure that businesses and consumers enjoy a competition and a transparency sufficient in terms of credit card fees.