Small businesses welcome Ottawa’s promised action on credit card fees

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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 cope with rising fees. short term costs.

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Budget update says government intends to enter into negotiations with payment networks, financial institutions, businesses and other stakeholders to reduce credit card transaction fees for small businesses .

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Small business advocates have long called for action on these fees, which they say are harder for small businesses to swallow and become increasingly problematic as customers move away from cash.

He said the government is releasing draft legislative changes to the Payment Card Networks Act, and if the industry does not reach an agreed solution in the coming months, Ottawa will introduce the legislation during 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 financial update included a stronger commitment to lower credit card processing fees for small businesses.

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However, CFIB President Dan Kelly said he fears the fee relief may be too slow to help deal with current inflationary pressures on small businesses.

New rules came into effect in October allowing businesses to add additional fees to credit card transactions, but a CFIB report found many business owners were unsure whether to do so. fear of losing customers.

The rules do not reduce fees charged to businesses, many of which have already built the fee into their retail prices.

Kelly said the government’s direction in the economic statement is broadly positive and should encourage negotiations with card networks and banks for a quick deal.

Small business advocates also argue that larger companies are often charged lower fees, making pricing unfair to small and medium-sized businesses.

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The government launched consultations on reducing credit card fees for businesses in August 2021, saying the pandemic has rapidly increased electronic payments and online transactions. At the time, he acknowledged that because small and medium-sized businesses have less bargaining power than larger companies, they are therefore subject to transaction fees that are “among the highest in the world”.

Other jurisdictions have already taken steps to reduce fees by placing caps on how much companies can charge, including Australia and the European Union.

— With files by Ian Bickis

This report from The Canadian Press was first published on November 4, 2022.

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