Small business advocates say the government’s mention of credit card transaction fees in Thursday’s fall economic statement is a positive step, but won’t help businesses deal with rising costs in the short term.
The fiscal update said the government intends to enter into negotiations with payment networks, financial institutions, businesses and other stakeholders to lower credit card transaction fees for small businesses.
Small business advocates have long been pushing for action on these fees, which they say are more difficult to swallow for small firms and are becoming more of an issue as customers move away from cash.
It said the government is publishing draft legislative amendments to the Payment Card Networks Act, and if the industry can’t come to an agreed solution in the months to come, Ottawa will introduce the legislation in the new year to regulate credit card transaction fees instead.
In a written statement Thursday, the Canadian Federation of Independent Business (CFIB) said the government’s fiscal update included a stronger commitment to reduce credit card processing fees for small businesses.
However, CFIB president Dan Kelly said he’s concerned relief on the fees may be too slow to help with the current inflationary pressures on small businesses.
New rules took effect in October allowing businesses to add surcharges to credit card transactions, but a CFIB report found many business owners were unsure whether they would do so for fear of losing customers.
The rules don’t reduce the fees charged to businesses, many of which have already baked the fees into their retail prices.
Kelly said the direction the government took in the economic statement is overall positive and should encourage negotiations with card networks and banks towards an early deal.
Small business advocates also argue that large businesses are often charged lower fees, making the prices unfair for small and medium firms.
The government launched consultations into reducing credit card fees for businesses in August 2021, saying the pandemic rapidly increased electronic payments and online transactions. At the time, it acknowledged that because small– and medium-sized businesses have less bargaining power than larger businesses, they are therefore subject to transaction fees that are “amongst the highest in the world.”
Other jurisdictions have already moved to reduce the fees by imposing caps on how much businesses can be charged, including Australia and the European Union.
With files from Ian Bickis.
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