Canadian Customers Will Soon Have to Pay More to Use Certain Premium Credit Cards

Canadian Customers Will Soon Have to Pay More to Use Certain Premium Credit Cards

Canadian customers will soon be subject to additional fees when paying for purchases with certain premium credit cards, now that Visa and MasterCard have entered into a settlement agreement stemming from a class action lawsuit that will see both companies make changes to their “No Surcharge Rule”.

In 2011, Canadian merchants filed a lawsuit alleging that Visa and MasterCard rules forced retailers to accept all credit cards as payment, including cards that charge higher retailer fees for each transaction. The rules also forced retailers to bear the full weight of the merchant fees as they are not allowed to surcharge customers who use premium cards.

After discussions with the federal government, Visa and MasterCard agreed in 2014 to voluntarily reduce the fees for five years.

Earlier this week, however, both credit card corporations entered into a settlement agreement, in which they agreed to pay $19.5 million each and allow merchants to add limited surcharge fees when accepting premium credit cards as payment from consumers.

Visa said in a statement that the new rules will come into effect 1.5 years after provincial courts in British Columbia, Alberta, Saskatchewan, Ontario and Quebec approve the settlement.

According to a list of rates* compiled by the Canadian Federation of Independent Business (CFIB), merchant fees are typically about 1.64 per cent of the purchase for regular Visa transactions and 1.69 per cent for regular MasterCard transactions. In contrast, merchant fees ranged anywhere from 2.13 to 2.29 per cent for some premium Visa cards and 1.69 to 2.64 per cent for some premium MasterCard cards.

So if a customer purchased $100 worth of goods with a regular Visa, the merchant would pay around $1.64; however, if the customer paid with one of Visa’s premium cards, the merchant fee would be around $2.13.

The CFIB applauded the settlement as it has long advocated lowering or removing merchant fees.

“The ability to add a small surcharge to accept a credit card payment – particularly for higher cost premium credit cards – is an important power to have, but it is not expected to be widely used by smaller merchants,” said CFIB president Dan Kelly. “It takes a lot to get a customer into one’s store and even more to get them to the register. About the last thing most merchants would want to do is frustrate a consumer at the point of payment,” Kelly added.

Visa and MasterCard released statements saying they do not admit to any wrongdoing in the class action.

There is currently no information on exactly how much consumers will have to pay in premium surcharges once the rules come into effect.

If these new rules have you wondering which credit card best suits your needs, provides reviews and helps you sort through an array or regular and premium credit cards, all with their own pros and cons. Compare the best credit cards today and find a card that works for you, not the other way around!

*Rates were based on preferred total merchant rates for CFIB members with Chase Paymentech.


Related Topics

Credit Card News / Credit Cards / RSM News

2 thoughts on “Canadian Customers Will Soon Have to Pay More to Use Certain Premium Credit Cards

  1. On large ticket items, if the fee I too high, I will walk away. It makes no sense to charge me a fee when the next week, the retailers are reducing their items by 50% to 80%. T here must be a very large markup in the first place.

  2. I’d rather just pay cash or use an online service for making the transaction.

    These days banks and credit cards are offering less and less services and asking patrons to DIY everything.

    And yet they don’t reduce their service changes. They raise them usually. When is the little guy aka consumer buying the items less likely to bare the brunt of the fees for this fees for that?

    It’s like the bank/cc company expects that you pay them because you are basically working for them.

    The only way to get out of this rat race is to get out of debt and start paying with cash.

    What about the people who don’t have it? Well the get screwed then don’t they!

    People in Canada really do need an educational program on how finances work as well as more open discussions with others on budgeting/spending.

    Too many people are in debt and for a lot of them it was because of a lack of education on how the “system” works. Too many people are getting the wool pulled over their eyes and that really worries me.

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