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Canadian Guide to Interchange Rate and Card Brand Changes for Fall 2023

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Ryleigh Stangness | October 4, 2023

“Card brands like Visa and Mastercard announce changes to the Canadian Interchange rates every October and April.”
8 min read
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    As a merchant, it’s important to understand the interchange rates associated with processing credit and debit card payments.

    These rates are set by the card networks (Visa, Mastercard, American Express, and Discover Card) and are a component of the mechant fees that businesses pay to accept payments.

    Recently, several changes have been made to these interchange rates that may affect your merchant processing costs.

    This Fall, changes are mild and few. We will cover all these changes in more depth later in this article, but here are the key takeaways:

    1. Visa interchange Updates

    • Cross-Border Impact: Visa's recent changes, while relatively mild, may impact businesses that handle cross-border transactions, such as eCommerce companies serving international customers.
    • EMV-enabled POS equipment may mean lower fees: Time to update your POS hardware? Businesses should be aware of Visa's System Integrity Fees for non-chip readers.

    2. Mastercard Interchange Updates:

    • Mastercard's Wholesale Travel Transactions Program has broadened its eligibility, offering B2B businesses commercial credit interchange rates ranging from 0% to 2%. Spring clean your customer payment details and buff up against fraud: New Mastercard AI Fees for declined authorization transactions on recurring transactions, specific decline codes, and more.

    3. Interac Interchange Updates:

    • Interac is expanding its Tier 1 pricing to include a new MCC code.

    What Do Interchange Rate Changes Mean For My Business?

    Comprehending interchange rates is helpful for understanding where processing fees may fluctuate and anticipating what you'll be paying in merchant fees through an Interchange Plus pricing model. Plus, if interchange rates increase and your provider increases their rates, this can be an opportunity to get out of your contract and switch. If your current provider has an interchange plus pricing model, guides like this one can help you navigate any rate increases while finding those savings opportunities as well.

    Want to compare your current rates to find out how much you could be saving?

    Use our free rate calculator.

    New Visa Interchange Rates for Canadian Merchants

    This October, Visa has introduced a few tweaks to its existing interchange rates and the addition of a few new rates that will affect Canadian merchants. In this section, we will delve into these changes and what they mean for businesses operating in the Canadian market.

    These changes primarily impact merchants who accept cross-border payments, including Canadian businesses that cater to customers in the United States. This is especially common in the realm of eCommerce, where global transactions are routine.

    Interestingly, many businesses don't know that international Visa and Mastercard have distinct international entities. This means that when a transaction occurs across borders, the applicable fees are determined by the same entity for both US and Canada. So, whether you are a Canadian or US merchant, your business is being charged the same rate.

    Changes to International / Interregional Base Fee Programs

    Visa has made two significant adjustments to its interchange rates in the international category:

    Elimination of Older International Fees

    Visa has eliminated several older international fees that were previously in place and discontinued fees on the following consumer transactions:

    • Electronic payment
    • Acquirer chip
    • Transmitter chip
    • Online merchant
    • Secure e-commerce

    Introduction of New Charge Codes, Names, and Rates

    In addition to discontinuing some fees, Visa has introduced a fresh batch of charge codes, along with new names and associated rates.

    Rebranded Rates

    Many of these newly introduced fees have simply undergone a rebranding process involving the adoption of new names while retaining the existing fee structure. You can view all of Visa’s interchange rates here. The changes in fees for these rebranded rates fall within a range of 0.00% to 0.16% and are increasing by an average of 0.1%. Notably, some fees have seen no alteration in their rates. A noteworthy adjustment is observed for the new international debit rates. Visa has removed the per transaction fee of $0.22, keeping only the percentage fee of 0.05% for this category

    New Rates Visa's new rates for international transactions span a range of 0.05% to 2.05%.

    Visa Estimated Authorization Fee

    This past April, Visa began charging a fee of 0.0226% Estimated Authorization and Supplemental Authorization request ( which essentially is a check a business might run on a card to determine if the card is valid and whether the transaction will be flagged for fraud or any other issues). A business can run an authorization on a $0 transaction or for a specified amount. A business would send an additional authorization amount if they needed to increase the amount and they want to verify the card will be approved.

    New System Integrity Fees ( Fee For Non-Chip Readers)

    This October, Visa will start charging a non-compliance fee of $0.1695 for using non-chip terminals. As payment technology advances, we are seeing a crackdown on riskier transactions and even the eradication of capabilities like Swipe, which are known for higher risks of fraud and security breaches. With Helcim, both our card reader and our new Helcim Terminal Chip EMV enabled, which keeps your transactions secure and your rates lower.

    Smart terminal made for retail

    New Mastercard Interchange Rates for Canadian Merchants

    New Rates

    Wholesale Travel Transactions Program (B2B)

    Mastercard has made an update to its Wholesale Travel Transactions Program, which is designed to benefit businesses that work with other businesses (B2B). Now, they've broadened the list of industries that can take advantage of these program rates, known as commercial credit interchange rates. This means that all sorts of businesses involved in B2B transactions can now access these rates, which can range from as low as 0% to a maximum of 2%.

    Authorization Optimizer Service Fee

    On October 9, 2023, Mastercard will begin assessing a new Authorization Optimizer Service Fee (AI Auth Optimization Fee) of 0.02 USD. For this service, Mastercard is charging merchants when an authorization is declined. Mastercard is leveraging its network visibility and artificial intelligence to provide you with insights on how and when to resubmit authorization requests for successful approval.

    This fee will be applied when:

    • Transaction is recurring
    • Decline reason code is 51 (insufficient funds)
    • Mastercard provided payment advice codes between 24 -30

    PS Mastercard payment advice codes are different from decline codes. Advice codes 24 to 30 are informational messages that provide guidance during a payment transaction and inform the merchant to try again after a specific period (ranging from 1 hour to 10 days).

    Decline Reason Code Service Pricing for CNP Transactions

    On September 12, 2023, Mastercard's DRCS Fee will start applying to all card-not-present transactions, including, but not limited to, account verification transactions and refund authorizations. This fee will not apply to mail order/telephone order (MOTO) transactions. While the fee for these decline authorization transactions is nominal, excessive declines can start to add up. Additional fees and higher interchange fees are common for card-not-present payments since the transaction risk associated with processing these transactions is higher for the card brands and financial institutions involved.

    Here are some tips for reducing declines and decline fees:

    • Clean up your customer database regularly to make sure account information is up to date and customers are still using those bank accounts or cards (especially for recurring transactions which might be outdated after some time.) Fortify your business against card attacks, which would result in many declined transactions by using the latest fraud detection tools and best practices such as address verification systems (AVS).

    Learn more about best practices to prevent card-not-present fraud to protect your business and keep your processing rates low.

    New Interac Interchange Rates for Canadian Merchants

    The only significant change from Interac applies to a niche merchant category code for toll roads and bridges ( MCC 4784). This MCC will qualify for lower interchange rates through Tier 1 pricing.

    The Benefits Of Being A Helcim Merchant

    Changes to interchange rates could mean savings for businesses processing with Interchange Plus Pricing. If you are looking for the right pricing model to start accepting debit and credit card payments at your business, whether online or in person, our article on pricing models helps to outline different payment processing options out there. Knowing when and how the card brands have adjusted their rates can help you understand changes in your monthly statement. The adjustments made by Visa and Mastercard this Fall can also highlight which types of payments and tools can help you save on your payment processing while still delivering a great experience to your customers. As long as your payment processor offers Interchange Plus pricing, you'll enjoy the advantage of automatic cost savings whenever the card brands reduce their interchange rates. This benefit applies regardless of your method of payment acceptance. You won't need to take any action to access these updated rates. It's just one of the many perks of choosing a payment processing partner like Helcim.


    What Does Interchange Mean In Payment Processing?

    Interchange is the fee collected by the credit card issuing bank on every transaction. These rates are set by Visa and Mastercard every year and apply to all processors. In other words, if the Interchange rate for an RBC Visa consumer credit card is at 1.42%, then RBC is due 1.42% whenever that card is used to make a purchase. The interchange fees are set by financial institutions and the card networks (Visa, Mastercard, American Express, and Discover Card) and are the fees that merchants pay for each transaction. Each interchange fee is made up of several factors for any given transaction, such as the type of card being accepted, the merchant category code (MSS), which refers to the type of business and industry your business operates in, and the transaction type (such as online, in-person, or keyed.

    Who Pays The Interchange Fee?

    The credit card processors (like Helcim) are responsible for paying the bank the interchange after the transaction has been processed. Hence, the interchange fee will make up a component of your credit card processing fees. Your processing fees will vary depending on your payment processor's pricing model, but all providers have to pay the interchange fee to the issuing banks and card brand networks.

    How Do Canadian Merchants Benefit From the New Rates?

    This Fall, many merchants may find the impact of interchange rate changes to be relatively minimal. By utilizing chip-enabled terminals and robust fraud protection measures, you can effectively shield yourself from potentially higher fees while still capitalizing on other lowered interchange rates. It's important to note that these rates undergo adjustments every October and April, which means that if rates do happen to decrease, you, as a merchant, have a valuable opportunity to tap into these reduced rates.

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