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The Helcim Blog / Payment News

How Canadian merchants could claim $600 until Sept 30, 2022

Ryleigh Stangness | June 22, 2022

“Taking Visa or Mastercard credit card payments between 2001-2021? You might qualify to receive up to $600 as part of a class action settlement.”

3 min read

Canadian merchant? You might be eligible to claim up to $600 from class settlement!

If you were taking Visa or Mastercard credit card payments between 2001-2021 and paying processing costs, specifically merchant discount fees, it might be worth looking into how you can claim up to $30-$250 back per year.

Small businesses processing less than $5 million per year can send in their claim at no cost to them before September 30th, 2022, to qualify to receive up to $600 as part of a class action settlement.

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Why was there a settlement?

The settlement is the result of a lawsuit filed on behalf of businesses who have been stuck swallowing the cost of merchant discount fees but were not able to apply a surcharge to offset this because of VISA and Mastercard restrictions or choose not to accept Visa and Mastercard cards with higher interchange rates such as cards with high rewards programs.

Higher interchange rates set by these brands and the banks meant that merchants, regardless of their processor, were paying higher processing costs. Even with interchange plus pricing and a smaller margin than most flat rate processors, this meant that merchants were paying higher costs for accepting credit cards rather than debit or cash for example. And since legal restrictions require you to not discriminate between card brands or types, if merchants wanted to accept credit cards, they had to take them all, including higher interchange rates from brands like VISA and Mastercard and their cards with higher interchange rates.

The class action resulted in a settlement with the banks and card brands admitting no fault but granting merchants $131 million before deductions to be distributed among claimants subject to approval. 40% of this settlement will go to small businesses.

What's next?

Aside from compensation available to eligible claimants, merchants will also now be able to pass on transaction costs to their customers if they choose, beginning in the fall of 2022. Surcharging, up to a cap, will be permitted for at least five years, which allows merchants to be more flexible with their payment options at no additional cost. This is different from convenience fees applied to payment methods rather than payment card types.

Here’s how to submit your claim

Step 1: Visit the Canadian Credit Card Settlements Online Claim form here. Step 2: Select your claim type. Small businesses (under $5 million/year) will be an “Undocumented claim.” Step 3: Provide your business information such as claimant name, contact information, address, company information, and business address. Step 4: Submit a claim. Step 5: Claim review. Step 6: Approval or denial of your claim. Step 7: If approved, you will receive your claim reimbursement before 2023 as an ACH payment or via check. If you are interested in learning more, read our FAQs below or visit the Credit Card Settlement website, which details the class action.

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What if my claim is denied?

If your claim is denied, you will not be able to appeal the decision if you are a small business. However, you can get in touch with administrative staff to discuss your claim or any concerns you may have. Simplified and documented claims (Medium and large-sized merchants) will have 30 days from the decision to pay the $150 fee to go through the arbitration process.

How much do medium and large-sized businesses qualify for? If you are processing between 5 and 20 million dollars per year, you can qualify for up to $250 per year between 2001 and 2021.

Can I get help submitting my claim?

Yes. Depending on who you go with, they may charge you a fee. Still, other businesses like the Canadian Federation of Independent Business (CFIB) are processing claims at no cost to merchants. However, you can fill out the application on your own for free if you choose.

Do I need to provide proof or documentation that I paid merchant discount fees?

If you are a small business (less than five million dollars in annual revenue), you will not. Medium and large merchants (five to twenty million dollars) will need to provide witnessed documentation.

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