After a multimillion-dollar class-action lawsuit with MasterCard Inc (NYSE : MA) and Visa Inc (NYSE: V), enterprises in Canada could be eligible to collect hundreds of thousands of dollars in card processing costs.
CFIB says businesses can claim rebates in swipe charges
On Monday, the Canadian Federation of Independent Business (CFIB) said that businesses can now claim rebates on swipe fees levied on card transactions stretching back 20 years. The agreement comes as COVID-19 has accelerated the trend of electronic payments as more people shop online.
Senior vice-president of national affairs at CFIB Corinne Pohlmann said, “During COVID, cash disappeared and everyone started paying with plastic. Credit cards became much more prevalent so the amount of fees merchants are paying has also increased.”
Credit cards levy merchants’ interchange fees on purchases, which are split between payment processors, card companies, and banks. Fees vary from roughly 1% for basic credit cards to almost 3% for credit cards that offer benefits like money back or reward points.
Pohlman stated, “The more perks on a card, the more expensive it is for a merchant to accept. I don’t think consumers understand how big a cost it could be for a merchant.”
While a settlement doesn’t really reduce the rates, it does permit enterprises to request a return of part of the charges they have paid from 2021. Small retailers can get up to $600 in rebates, while bigger merchants can get up to $5,000 in rebates. Beginning this fall, businesses will be able to transfer credit card costs on to customers under the terms of the agreement.
Few retailers likely to reclaim fees
Although few retailers are likely to levy fees for card payments, Pohlmann believes that allowing businesses to reclaim such charges will assist them in fighting future fee increases.
Similarly, the government has promised to reduce card processing rates for smaller firms on numerous occasions.
Gary Sands, public policy SVP with the Canadian Federation of Independent Grocers, said, “They’ve promised to reduce fees for small- and medium-sized businesses to rates that are similar to what … big businesses enjoy.”