Visa-Walmart deal could mean higher fees for smaller merchants: CFIB

The head of the Canadian Federation of Independent Business says he's concerned that a deal struck between Walmart Canada and Visa over merchant fees could lead to higher costs for smaller businesses.

Details of the agreement, which was announced Thursday and ended a months-long dispute between the two corporate behemoths, have not been provided by the companies.

But Dan Kelly, president and CEO of the CFIB, says he suspects Walmart was able to negotiate a reduction in merchant fees—a move that could impact smaller merchants.

"Typically whenever there is a special deal created for one large merchant, it happens at the expense of smaller merchants,'' he said, explaining that credit card companies and banks customarily look for different ways to make up lost fee revenue.

"We're going to have to watch this really closely to see if this special deal for Walmart comes with higher prices for other smaller merchants.''

Visa spokeswoman Carla Hindman said the company's agreement with Walmart is specific to that retailer and doesn't affect other merchants.

"As previously announced, we have implemented rate changes aimed at lowering costs for businesses in Canada several times,'' Hindman said in an email.

In July, Walmart began refusing Visa credit cards at its three stores in Thunder Bay, Ont., citing excessive fees. In October, it extended that ban to Manitoba, where it has 16 stores.

The retail giant had been planning to phase out the cards at all of its 400 stores in Canada.

But after reaching a deal with the credit card company, Walmart resumed accepting Visas at its Thunder Bay and Manitoba stores on Friday.

Kelly says CFIB, which represents over 109,000 business owners across the country, will continue to lobby Visa and other credit card companies for lower merchant fees for small- and medium-sized companies.

"Small firms have complained for many years about the high cost of credit card processing fees, just like Walmart has,'' Kelly said.

On average, interchange fees in Canada are 1.5 per cent, according to the Retail Council of Canada, which represents retailers including Walmart.

"It is a significant cost for the merchant community,'' said David Wilkes, the council's senior vice-president of government relations and the grocery division.

"Those costs have an inflationary impact on product costs and consumer purchases.''

The Canadian fees are much higher than they are in many other jurisdictions, said Wilkes, citing France as an example. There, merchants pay interchange fees of around 0.3 per cent, he said.

The Finance Department has said it's reviewing merchant fees to determine whether the costs and benefits are appropriate.

In 2014, Visa and MasterCard agreed to limit interchange fees to an average of 1.5 per cent for five years.