Back in November, Visa and Mastercard announced that they would be voluntarily lowering the interchange rates for a duration of 5 years.
They were responding to the increased pressure from business groups and the capital, Ottawa. Both of them have been especially unhappy since the introduction of "˜premium' credit cards back in 2009. Visa's new rates took effect on April 15. MasterCard's new rates take effect on April 17.
What you need to know about the new rates:
What's Interchange?
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.
Who Pays the Interchange?
The credit card processors (like Helcim) are responsible for paying the bank the interchange after the transaction has been processed.
So How Do Canadian Merchants Benefit From the New Rates?
This is the frustrating part for many merchants. What's being lowered are the Interchange rates (the processor's cost), however, that does not mean that your own rates will automatically be lowered. Since most Canadian merchants are on a tiered (qualified/non-qualified) price structure, most processors will not automatically lower your tiers. Instead, they will simply pocket the difference.
Below is a brief overview of the new rates:
Card BrandCard TypePriorApril 2015
Visa
Swipe/Chip Consumer
1.540 %
1.420 %
Visa
Swipe/Chip Infinite
1.740 %
1.610 %
Visa
Swipe/Chip Infinite Privilege
2.250 %
2.080 %
Visa
Keyed Consumer
1.650 %
1.520 %
Visa
Keyed Infinite
1.850 %
1.710 %
Visa
Keyed Infinite Privilege
2.650 %
2.450 %
MasterCard
Swipe/Chip Consumer
1.590 %
1.490 %
MasterCard
Swipe/Chip High-Spend
2.000 %
1.770 %
MasterCard
Swipe/Chip Premium High-Spend
2.250 %
2.120 %
MasterCard
Keyed Consumer
1.720 %
1.610 %
MasterCard
Keyed High-Spend
2.130 %
1.890 %
MasterCard
Keyed Premium High-Spend
2.650 %
2.490 %
For a complete list of credit card processing rates, visit here.
I'm a Helcim Merchant, What Do I Have to Do to Get These Rates?
Not a thing! Fortunately, we offer cost-plus pricing instead of qualified/non-qualified pricing. That means that all of our merchants (both new and old) will automatically see the new Interchange rates passed on to them.
I'm Not a Helcim Merchant
Time to switch? 🙂 Here's our pricing.