Eligible Canadian merchants for refunds after paying with Visa, Mastercard

Businesses in Canada may be eligible to claim hundreds of dollars in credit card processing fees after settling a multi-million dollar class action lawsuit with Visa and Mastercard.

On Monday, the Canadian Federation of Independent Business (CFIB) said merchants can claim discounts on so-called credit card swiping fees dating back to two decades.

The settlement comes as the pandemic rapidly shifts the direction of digital payments as more consumers shop online.

“During COVID, cash disappeared and people started paying with plastic,” said Corinne Pohlmann, Senior Vice President of Country Affairs at CFIB.

“Credit cards became much more popular, so the fees charged by merchants also increased.”

Credit cards charge merchants called the exchange rate on purchases, a fee shared between credit card companies, payment processors, and banks.

Those fees can range from around 1% for a basic card to almost 3% for a card that offers rewards like cashback or points.

“The more perks on the card, the more expensive the merchant accepts,” says Pohlmann. “I don’t think consumers understand how big that cost can be for a merchant.”

While the settlement does not change the fees, it does allow businesses to apply for a refund of some fees paid since 2021.

Rebates range from $30 a year for small merchants or up to $600, to $250 a year for larger merchants, or $5,000.

The payments agreement also gives merchants the right to pass on credit card fees to customers starting this fall.

While very few merchants are expected to charge extra fees when accepting credit cards, Pohlmann said giving businesses the ability to recoup those fees will help them push back against future fee increases. future.

Meanwhile, the federal government has repeatedly pledged to reduce credit card processing fees for small businesses.

“They have promised to reduce fees for SME businesses to the same level as businesses,” said Gary Sands, senior vice president of public policy for the Federation of Independent Grocery Stores of Canada. great benefit.

“But there was a jarring silence from Ottawa.”

Sands said the amount refunded by Visa and Mastercard represents only a fraction of the fees paid. He also expressed concern that the settlement could be used by credit card companies as a “disguise in their fight against lowering credit card fees.”

“Additional fees are not a solution,” he said. “What businesses are deliberately putting themselves at a competitive disadvantage by passing those fees on to customers.”

This Canadian Press report was first published May 30, 2022

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