Government Seeks Consultation On Transaction Fees

The federal department of finance has launched consultations with the aim of lowering the cost of doing business by reducing credit card transaction fees. These savings would allow small- and medium-sized businesses (SMBs) recovering from the COVID-19 pandemic to direct financial resources toward growth and job creation. The pandemic has brought about a rapid and significant increase in electronic payments and online transactions causing SMBs, which have already been hard hit by COVID-19, to incur fees for these transactions also known as interchange fees. Canada has amongst the highest interchange fees in the world. Research says 32 per cent of Canadians use credits cards more often since the start of the pandemic and eCommerce retail increased by roughly 100 per cent between February 2020 and May 2021. For a typical SMB without access to preferential rates, online payments can attract interchange fees that are over twice as high as those for in-store payments. With the increase in eCommerce, this trend could result in a permanent increase to the cost of doing business for Canadian small businesses. The government intends to complete the consultation process in the fall and provide details on next steps in the fall economic statement. As indicated in Budget 2021, the government is prepared to consider legislative amendments to the Payment Card Networks Act that would provide authority to regulate interchange fees, if necessary.