Article content continued
Dan Kelly, chief executive of the Canadian Federation of Independent Business (CFIB), said it appears the fee structure includes lower fees for in-person purchases and higher fees for e-commerce in an attempt to average out at the 1.4-per-cent target. The drastic change in buying habits, however, will have thrown those models out of whack.
“I believe that both Visa and MasterCard, especially Mastercard, though, will not meet their 1.4-per-cent obligation because their rate structures were basically locked and loaded pre-pandemic,” Kelly said. “There’s no blame on Visa and MasterCard for their rate structure changes. I think they both intended to try to hit the 1.4 level, but COVID has meant that will be near impossible.”
Both CFIB and CFIG said interchange fees on e-commerce have hovered around 1.8 per cent, depending on the retailer.
“We don’t have data yet, but everybody’s expecting that they will miss their 1.4 target,” Kelly said. “It’s going to be up to the government to figure out how they’re going to enforce that rule.”
But Visa on Tuesday said it is keeping its promise to bring down interchange fees to an average rate of 1.4 per cent for domestic consumer credit-card transactions, both in-person and online.
“Moreover, Visa Canada’s interchange rates for e-commerce transactions are lower than they have ever been,” Visa said in an emailed statement, adding that on top of the agreed reduction to 1.4 per cent, there were also “deeper reductions for rates applicable to small business categories,” including restaurants, grocers, dry cleaners and variety stores.
