Small businesses in Ontario can finally set to see hope from high credit card transaction fees. Starting in October 2024, these fees that have been a burden for many small businesses will be significantly reduced, particularly for businesses that fall into specific annual sales thresholds.

For years, small businesses have been paying up to 3% of each credit card transaction in fees. These costs can pinch hard especially for small businesses that count on every dollar, making it more difficult for them to expand, hire staff, and/or invest in growth. But as part of this new government initiative, credit card companies are stepping in to ease the pressure of these fees.

Who Qualifies?

Not every business will qualify for the new fee reductions, so who will?

• Businesses with annual sales less than $300,000 on Visa cards will be eligible for lower interchange fees.
• Businesses with annual Mastercard sales under $175,000 will see reduced rates.
• Non-profits with transaction numbers below these measures will also qualify for the fee reductions.

Do Businesses Need to Apply?

No formal application is required for eligible businesses to benefit from these fee reductions. The reduced rates will automatically apply to businesses that meet the annual sales thresholds. Credit card companies will identify qualifying businesses based on their transaction history and apply the new rates accordingly.

For businesses unsure of their eligibility, it’s recommended to review their yearly credit card transaction volumes with their payment processors or consult directly with Visa or Mastercard representatives.

To learn more or stay updated, visit Visa Canada or Mastercard Canada.

How Much Can I Save?

For in-store transactions, the rate will be reduced to an average of 0.95% and for online transactions, the fees will decrease by up to 7%. Eligible small businesses are expected to save a collective $1 billion over the next 5 years. For example, a small business processing $300,000 on average in yearly credit card payments currently pays around $4,000 in transaction fees. With this new agreement, this business could save around $1,080 per year.

Additionally, Visa and Mastercard are offering free access to online fraud prevention and cybersecurity tools to help small businesses protect themselves in such a complex digital world where one might rely heavily on online sales.

Broader Government Support

This move is part of a bigger picture, which is to make the payment processing industry fairer and more transparent. For Canadian small business owners, this change signals a positive path toward reducing costs and navigating the challenging financial landscape. As these new rules take effect in 2024, Ontario is setting up their entrepreneurs to have more room to grow and thrive.