Starting October 24, more Canadian small businesses will pay less to accept Visa credit cards. Visa is raising the cap for its small-merchant rate from CA$300,000 to CA$750,000 in annual Visa sales and trimming the rates themselves (CFIB). The headlines call it a win.
Read past the headline. In the same announcement, Canada's largest small-business group warned that Visa and Mastercard are adding a new fee of 1.8 cents (USD) to every domestic transaction (CFIB). Mastercard started this month. Visa starts in April 2027.
So some merchants get a discount, and every merchant gets a new line item. That deal sounds familiar to anyone who has read a U.S. processing statement.
What actually changed
The cut is real, but narrow. A basic Visa card tapped in store drops from 0.77% to 0.70% for qualifying merchants, and online drops from 1.30% to 1.20% (NCFA Canada). Mastercard didn't follow. Its small-merchant cap stays at CA$175,000 (CFIB).
The increases are broad. Mastercard's new Network Access and Brand Usage fee charges on every authorization, including declined ones, and bills Canadian merchants in U.S. dollars (Flexibl). It replaced a clearing fee Mastercard introduced just a year earlier. In the same release that cut small-merchant rates, Visa raised its standard business credit rate in Canada from 2.00% to 2.15% (Flexibl).
Follow the money. Interchange goes to the bank that issued the card. Network fees go to Visa and Mastercard. CFIB put it plainly: after cutting the banks' share, the networks are growing "their own slice" (CFIB).
Flat fees hit small tickets hardest
A percentage cut sounds bigger than a penny-and-change fee. For many businesses, the math runs the other way.
Take a café with a $6 average sale. A 1.8-cent fee works out to about 0.3% of that sale, before currency conversion. That's more than the 0.07-point interchange cut the café might get from Visa. If the café's annual Visa sales sit above CA$750,000, it gets none of the cut and all of the fee.
And the fee doesn't care whether the payment succeeds. A declined card still costs you on Mastercard.
Savings that never arrive
Canada has run this experiment once already. When Ottawa's 2024 deal cut small-business interchange by "up to 27%," the government said it "expects" processors to pass the savings on (Department of Finance Canada). It didn't require it.
Stripe kept its standard flat rate exactly where it was and passed the cut only to merchants on interchange-plus pricing (CityNews). Stripe said its own costs had risen more than the cut was worth (Payment Review).
If you pay a flat rate, a lower interchange rate often means a fatter margin for your processor. A new network fee, on the other hand, usually shows up on your bill. CFIB says processors "routinely" pass it to small merchants (CFIB).
Surcharging is the wrong answer
Canada also gave merchants a pressure valve. Since October 2022, businesses outside Quebec can add up to 2.4% to credit card purchases (CFIB). That right came out of a class-action settlement, not a fee cut. Merchants got about $188 million back and the right to bill customers for the rest (CBC).
Surcharging feels like fighting back. In practice it moves the cost to your customer and lets the networks off the hook. When merchants can pass fees along, they stop pushing back on fees, and the networks face less resistance the next time they add one.
The U.S. shows where that road goes. American merchants have been allowed to surcharge credit cards since 2013 (Payment Review). Fees kept climbing anyway:
- U.S. merchants paid a record $198.25 billion in card fees in 2025, up from $62.1 billion in 2009 (Beast Insights, citing Nilson Report data).
- The average Visa and Mastercard credit card rate rose from 2.02% in 2010 to 2.36% in 2025 (The CU Daily).
- Visa and Mastercard credit fees alone hit $118.8 billion in 2025, up from $25.6 billion in 2009 (Mass Lawyers Weekly).
The latest U.S. settlement repeats the pattern. It offers a 10-basis-point cut for five years and, in the same package, makes it easier to surcharge up to 3% (ABA). A small discount on one side, more room to charge your customers on the other. The National Retail Federation and other merchant groups oppose it and plan to keep fighting (Mass Lawyers Weekly).
Australia went the other way
Australia let merchants surcharge for more than two decades. This year its central bank concluded the system "is no longer achieving its intended purpose" (Reserve Bank of Australia). On October 1, Australia removed card surcharges on Visa, Mastercard, and eftpos and cut the cap on consumer credit interchange from 0.8% to 0.3% (RBA, Mozo). Big acquirers now have to publish how much of the cut they pass through to merchants.
Australia attacked the fee itself. Canada and the U.S. keep handing merchants a way to pass the fee along, and the fee keeps growing.
What this means for your business
Whether you operate in Canada, the U.S., or both, the lesson is the same. Headline rate cuts rarely reach your statement intact, and new fees nearly always do.
Check your pricing model. On a flat rate, interchange cuts probably stay with your processor. Interchange-plus pricing lets you see, and keep, the savings.
Read your statement for new line items. Network fees like NABU appear under names most merchants never notice. If a fee arrived this month, find out whether you're paying the network's cost or a marked-up version of it.
Cut the cost before you pass it on. A surcharge annoys customers and leaves your real rate untouched. Before you touch customer pricing, look for savings in your current setup, such as misclassified transactions or padded processor markups.
Frequently asked questions
Is Visa lowering fees for all Canadian businesses?
No. The lower rate applies to Visa consumer credit transactions for merchants under CA$750,000 in annual Visa sales. Mastercard's program still stops at CA$175,000 (CFIB).
What is the new 1.8-cent fee?
It's a per-transaction network fee charged to processors on domestic transactions. Mastercard began charging it in October 2026 and Visa plans to start in April 2027. Processors usually pass it to merchants (CFIB).
Should I add a credit card surcharge to cover rising fees?
We don't recommend it. Surcharging shifts the cost to your customers without lowering it, and it removes pressure on the networks to hold fees down. Start with an audit of what you pay today.
Find out what you're really paying
Send VeriFee your latest processing statement. We'll show you which fees are real, which are padded, and how much you can keep without charging your customers a cent more.
