Businesses in Canada may be eligible to claim credit card processing fee rebates following a multi-million dollar class action lawsuit settlement with Visa and MasterCard.
Merchants can now claim rebates on so-called swipe fees charged on credit card transactions dating back two decades, the Canadian Federation of Independent Business (CFIB) announced on Monday.
The class action settlement, launched in 2011, comes after the pandemic accelerated the shift to digital payments as more consumers shopped online.
“During COVID, cash disappeared and everyone started paying with plastic,” said Corinne Pohlmann, Senior Vice President of National Affairs and Partnerships at CFIB.
“Credit cards have become much more prevalent, so the amount of fees merchants pay has also increased.”
Fees charged each time the card is used
Credit cards charge merchants what are called interchange rates on purchases, a commission shared between credit card companies, payment processors and banks.
These fees can range from around 1% for basic cards to almost 3% for cards offering rewards such as cash back or loyalty points.
“The more benefits on a card, the more expensive it is for a merchant to accept,” Pohlmann said. “I don’t think consumers understand how much it could cost a merchant.”
Although the settlement does not change the fees, it does allow companies to request a refund of some of the fees paid since 2021.
Any Canadian merchant who accepted MasterCard and Visa credit cards between 2001 and 2021 and incurred merchant discount fees is eligible for a rebate of up to $30 per year or up to $600 total for small traders, at $250 per year or $5,000 for large traders.
Customers will soon be able to be billed a fee directly
The settlement also gives merchants the power to pass credit card charges on to customers, starting this fall.
While very few merchants are expected to add surcharges for accepting credit cards, Pohlmann said giving businesses the ability to recoup those fees will help them fend off future fee hikes.
Meanwhile, the federal government has repeatedly pledged to reduce credit card processing fees for small businesses.
“They promised to reduce fees for small and medium-sized businesses to rates similar to those enjoyed by large corporations,” said Gary Sands, senior vice president of public policy and advocacy for the Canadian Federation of independent. Grocers.
“But there was a deafening silence from Ottawa.”
Sands said the amount reimbursed by Visa and MasterCard is a tiny fraction of the fees paid. He also expressed concern that the settlement could be used by credit card companies as “camouflage in their battle to resist lowering their credit card fees.”
“The surcharge is not a solution,” he said. “Which company is going to deliberately put itself at a competitive disadvantage by passing these fees on to customers?”
When approached for comment by CBC News, MasterCard Canada and Visa Canada did not immediately respond.