The day after Visa signaled that it will raise the interchange fee charged to U.S. banks next year, both Visa and MasterCard “are on the verge of lowering the processing fees paid by Canadian merchants, a move that reflects the traction merchants have gained with the government,” The Wall Street Journal is reporting.
“People familiar with the negotiations, which were continuing Thursday (Oct. 30), said it was unclear whether the two credit-card companies would reduce the fees voluntarily, or whether they would be forced into the reduction by the government, which has sought to boost small businesses ahead of a 2015 federal election. A decision could emerge as early as Friday (Oct. 31),” the story said.
One version of the proposal would have both brands dropping their average interchange rate to 1.5 percent, although it’s unclear how long they would be required to maintain that rate. The change could happen within six months, the story said.
“The fee on a standard card, issued by a Canadian bank, ranges from 1.65 percent to 2.65 percent, according to rates posted by Visa Canada. Similar MasterCard rates in Canada range from 1.72 percent to 2.65 percent,” the Journal reported. “American Express Co. doesn’t appear to be involved in the latest round of conversations, in part because the company doesn’t have multiple rates for its assorted cards, said another person familiar with the situation.”