Jul 5, 2023
With the Canadian Federal Competition Tribunal set to provide its ruling on whether merchants should be able to surcharge or not honor all Canadian credit cards, there seems to be quite a bit of misinformation regarding how much merchants are actually being charged for different types of credit cards. Here is our understanding of the latest interchange rates (%) being charged by Visa and Mastercard respectively,to the merchants, for different merchants categories and credit card types.
Can merchants charge a credit card fee in Canada?
Any Canadian merchant can add a surcharge, or extra fee, that you must pay to use debit or credit cards at their store (except in Quebec). Some payment networks forbid this surcharge. As of October 6, 2022, this fee is 2.4% or $2.40 per $100.
And there is a reason why.
Those merchants are getting hit by credit card fees that cut into their margins.
If you use a credit card without rewards, the merchants stand to make more money. If you use one of the best credit cards in Canada with excellent rewards, those merchants are paying a lot.
Many Amex cards fall into this category and could charge a merchant up to 4% in credit card fees. It's one of the ways Amex funds all their welcome offers, privileges and more.
If you're using a not-so-good credit card, unfortunately, the only person you're hurting is yourself.
Often merchants build credit card processing fees into their pricing at the max rates. So a "lesser than" credit card may actually be penalizing you because you're paying more for the products, but not earning the max rewards.
It's why it's critical to get the best credit card your credit score and income will allow.
Below we break down how much Visa and Mastercard are charging merchants based on credit card type.
How much does Visa and Mastercard charge merchants?
| VISA (domestic) | ||||
|---|---|---|---|---|
| Classic, Gold, Platinum | Infinite | All other Commercial Credit Products | ||
| Grocery | 1.36% | 1.56% | 1.85% | |
| Gas | 1.21% | 1.41% | 1.80% | |
| Merchant > $2B volume | 1.40% | 1.60% | 1.80% | |
| Merchant > $850M volume | 1.45% | 1.65% | 1.85% | |
| Recurring Payments | 1.40% | 1.60% | 1.85% | |
| Emerging Segments | 1.00% | 1.20% | 1.80% | |
| Electronic | 1.54% | 1.74% | 1.90% | |
| Standard (card not present, etc) | 1.65% | 1.85% | 2.00% | |
| MasterCard (domestic) | ||||
| Core | High Spend | Premium High Spend (World, World Elite) | ||
| Merchant with > $1B volume | 1.40% | 1.60% | 2.00% | |
| Merchant with > $400M volume | 1.45% | 1.65% | 2.00% | |
| Petroleum > $400M | 1.21% | 1.41% | 2.00% | |
| Supermarket > $400M | 1.36% | 1.56% | 2.00% | |
| All other electronic card present | 1.59% | 2.00% | 2.25% | |
| All other (card not present, etc) | 1.72% | 2.13% | 2.65% |
Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.
