Credit card giants Visa and MasterCard have agreed to reduce their transaction fees from collected merchants by approximately 10 per cent combined.
Finance Minister Joe Oliver said in a statement Tuesday that the move “should ultimately result in lower prices for consumers.”
The fees being reduced are “merchant interchange fees” – the fees charged to businesses every time a credit card is used to make a purchase.
Visa Inc. and MasterCard Inc., in separate proposals, have agreed to reduce their rates to an average of 1.5 per cent for the next five years.
“These commitments represent a meaningful long-term reduction in costs for merchants,” Oliver said.
The changes are expected to be implemented by April 2015.
“As a result of the voluntary proposals, there is no need for the Government to regulate the interchange rates set by the credit card networks,” he said.
According to Oliver, the changes will be subject to annual verification by an independent third party to ensure compliance.
“These commitments represent a meaningful long-term reduction in costs for merchants,” Oliver said.