A key business cost from credit card transactions is what’s known as interchange rates. These are essentially handling fees that are set by the credit card company, paid by the payment processing company to its bank, but ultimately covered by the merchant that made the sale.
In 2018, the federal government struck deals with Visa and MasterCard to lower their average interchange rates charged to merchants on credit card transactions from 1.5 to 1.4 per cent.
Gary Sands, senior vice-president of the Canadian Federation of Independent Grocers, recently wrote to Finance Minister Chrystia Freeland, pointing out that the 2018 agreements predate the pandemic-driven surge in credit card purchases.
„In the spirit of being in this together, Canadians would hope that the banks and card companies would have stepped up and voluntarily reduced their fees,” said Sands. „But that did not happen, and calls to do so have been met with a deafening silence.”
Giancarlo Trimarchi, owner of Vince’s Supermarket in Sharon, Ont., says his company is paying more than ever during the pandemic — typically „well over” two per cent for online and phone orders.
„It doesn’t sound like a lot, but an extra 15 or 20 basis points on something that we can’t control is frustrating, because we have to find a way to mitigate that extra cost,” he said.
While consumers don’t pay those interchange fees directly, the costs are typically embedded in the prices businesses charge. Trimarchi said he doesn’t want to raise his prices, but he also needs to maintain the slim profit margins that are typical in the grocery business.
In a statement to CBC News, Mastercard said it remains committed to its „voluntary agreement with the Government of Canada” to reach the 1.4 per cent rate target.
Isaiah Archer of Whistle Buoy Brewery Company in Victoria says he and his four partners are seeing higher charges than that for plastic payments. It adds up; a full 99 per cent of their sales are from credit card transactions these days.
„It’s costing us more to make less, is the simplest way to put it,” said Archer.
