Visa and MasterCard agreed to cut their interchange rates in Canada by about 10 percent, to 1.5 percent on consumer credit cards, for the next five years, in an attempt to appease Canadian government regulators.
Visa, however, said the five-year duration is based on the government holding up its end of the bargain. “Visa enters into this undertaking with the full expectation that the government is committed to a level playing field,” the card brand said. “If Visa or our clients are disadvantaged as a result of entering into this undertaking, Visa reserves the right at any time to terminate or amend it. Visa has long maintained our opposition to regulatory approaches which impair a functioning market and that position has not changed. Visa believes the undertaking establishes stability and predictability for the Canadian payments industry. Importantly, the nature and content of the undertaking will avoid the kinds of regulatory measures that, when attempted in other markets, have left consumers worse off.”
MasterCard Canada President Betty DeVita offered similar comments in a MasterCard statement. “We continue to maintain the balance for all our stakeholders in the payments industry. We brought forward a voluntary solution that avoids the unintended consequences of regulation as we have seen in other countries,” she said.
American Express issued a statement that it will not be making any similar change in Canada. “American Express has committed to the Government of Canada to maintain its current business model, which provides merchant rates that are transparent, simple and consistent across our credit and charge Cards. We do not have an interchange model, and our pricing will continue to be based on the value we deliver to merchants.”