The federal government says it has finalized agreements with Visa and Mastercard that will see small businesses pay lower credit card transaction fees.
The government says Visa and Mastercard have agreed to reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95%.
Domestic consumer credit interchange fees for online transactions will be dropped by 10 basis points, resulting in reductions of up to 7%.
The reduced fees will apply to small businesses with an annual Visa sales volume below $300,000 or an annual Mastercard sales volume below $175,000.
The federal government estimates the changes will help 90% of credit card-accepting businesses in Canada by reducing interchange fees by up to 27%.
The reductions, which will come into effect in fall 2024, are expected to save eligible Canadian small businesses about $1 billion over five years.
The agreements also include commitments from Canada's large banks to protect reward points.
"The new agreements secured with Visa and Mastercard will make credit card transactions fairer for small businesses, which have less bargaining power than larger merchants to negotiate lower rates,'' Finance Minister Chrystia Freeland said in a press release announcing the changes.
"With lower interchange fees, small businesses will save money that they can use to grow their businesses and create more good jobs.''