Why Canadian Merchants Pay More for Card Processing: Comparing Interchange, Network Fees, and Processor Markups

November 5, 2026 • Blogs

Canadian merchants have long complained that card acceptance costs more at home than in much of the rest of the developed world. The picture is more complicated in 2026, with new small-business rates in place. The cost still depends on three separate layers, and a merchant who only looks at the processor’s quote misses most of the story.

The Three Layers of a Canadian Card Fee

One 2026 guide summarizes it this way: merchants pay interchange set by Visa and Mastercard, the networks’ own fees, and the processor’s markup.

Interchange: goes to the card-issuing bank. It’s the largest share by far. Moody’s, citing the Competition Commissioner, said interchange fees retained by the banks represent more than 80% of acceptance fees in Canada. That figure dates from the mid-2010s, so treat it as historical context.
Network (assessment) fees: go to Visa or Mastercard. One processor guide puts them at about 0.10% on consumer credit.
Processor markup: is the only layer you can usually negotiate. That includes the percentage, per-transaction fee, and monthly fees.

Why the Canadian Numbers Draw Criticism

Regulated markets are far lower: Business groups point to a cap of 0.3% in Britain, 0.28% in France and 0.5% in Australia. A separate report notes the EU and UK cap at 0.3% for domestic credit, and that Australia’s credit cap is 0.8% on average under some measures. Figures differ by source and by what’s being measured, so cite carefully.
Canada relies on voluntary commitments, not a legal cap: Visa says it continues to adhere to a voluntary commitment with the Department of Finance managing domestic consumer credit interchange to an average level of 1.40%, verified annually by an independent third party. The earlier 2015 commitments set an average of 1.50%.
An average hides the spread: A 1.4% average is made up of cheap and expensive cards. A CBC explainer notes the average is 1.4% but depending on the card, it could be up to 2% or more.
Industry groups say the cost shows up in prices: The Retail Council of Canada says Canadians pay at least $4.5 billion more annually in retail prices than they would if credit card interchange rates were comparable to most of the EU and Australia. That’s an advocacy estimate, and economists debate how much of any saving would reach consumers. One source notes it’s hard to be certain what a cap would do to rewards and prices.
Concentrated market: The Competition Bureau has said Visa and Mastercard dominate, with as much as 90 per cent of the industry. That’s from a 2013 article, so use it as background.

What’s Changed: Small-Business Relief

Canada’s picture shifted in recent years.

The 2024 small-business program: One guide says interchange fell by up to 27 per cent for eligible businesses, with a target weighted average of 0.95 per cent in store, and online interchange down 10 basis points.
Eligibility thresholds: Annual Visa sales below $300,000, or annual Mastercard sales below $175,000. Several sources say Visa’s threshold rises to $750,000 on October 24, 2026. That date has just passed, so confirm Visa’s current published schedule.
Visa’s changes on October 24, 2026: One guide lists classic small-merchant card-present falling from 0.77% to 0.70%, and card-not-present from 1.30% to 1.20%. Another source says most small merchant rates, online and in store, fall by 0.07 to 0.10 percentage points. Verify against Visa Canada’s published rates.
Published examples (check current schedules):
- Visa Classic, Gold, Platinum: 1.25% in store and 1.40% online for standard rates.
- Small merchant Visa, card present: 0.77% for Classic/Gold/Platinum, 0.99% for Infinite, up to 1.80% for Infinite Privilege.
- Mastercard small business, card present: 0.70% Core, 0.93% World, 1.19% World Elite, with online rates higher.

Where Canadian Merchants Still Pay More Than Expected

Premium, rewards, and business cards

Rewards cost merchants money: Interchange climbs with card tier. One guide lists basic cards at 1.25%–1.60%, rewards cards 1.50%–1.90%, Infinite cards 1.75%–2.30% and corporate cards 2.00%–2.60%. That’s a third-party range, not an official schedule.
Business credit starts around 2%: One source lists business credit at 2.00%, with Visa Infinite Business at 2.35%.
Small-business discounts target consumer cards: Business and commercial cards often fall outside them.

Online and card-not-present sales

Card-not-present is more expensive. The same small-merchant Visa Classic rate is 0.77% card present versus 1.30% card not present.
Manual keying and non-tokenized online payments can fall into costlier categories.

American Express

Amex doesn’t publish interchange the way Visa and Mastercard do. One guide says that Amex doesn’t list its standard fees online, and they’re believed to be higher than those of Visa and Mastercard. A processor guide puts OptBlue small-merchant totals around 2.0% to 3.0% in person. Treat these as indicative.

International cards

A card from outside Canada used on a Canadian merchant account is a cross-border sale, with Visa Canada’s international rates starting at 1.10% in store and 1.60% online for a basic card and reaching 2.00% on commercial cards, plus cross-border network fees. No small-business discount applies.
See our earlier article on international card costs and FX markups.

Merchants above the small-business thresholds

Once you exceed the cap, you move to standard rates. One guide lists the standard Visa Classic rate at 1.45% versus the small-merchant 0.77%. Growth can therefore cause a sudden jump in interchange. Watch your volumes against the thresholds.

Processor Markups: The Layer You Can Negotiate

Interchange-plus: You pay actual interchange plus a stated markup. One processor’s published pricing shows interchange plus 0.40% and 8 cents in person, and interchange plus 0.50% and 25 cents online.
Flat rate: Simple but often more expensive in total for low-interchange cards. One example lists PayPal Checkout at 2.90% + 30¢, with extra charges on cross-border payments.
Tiered pricing: Mixed into “qualified,” “mid-qualified,” and “non-qualified” buckets, which makes it hard to see what’s passed through. Ask for interchange-plus.
The small-business benefit may not reach you: If your pricing is flat-rate, lower interchange can stay with the processor. If it’s interchange-plus, your savings should show up directly.
Worked comparison from one guide: a $100 Visa consumer credit sale at about 1.05% interchange and network cost plus a 0.40% + $0.08 markup comes to roughly $1.53, an effective rate of 1.53%. That’s one provider’s illustration, not a market average.

Surcharging and Debit

Surcharging is now permitted: Visa and Mastercard modified their no-surcharge rules in 2022 after a class-action settlement, allowing merchants to surcharge up to 2.4% on credit card transactions. Many merchants haven’t adopted it. The CFIB said businesses in competitive sectors such as retail and hospitality don’t want to alienate consumers. Surcharging has legal and disclosure requirements, so get advice before introducing it. This isn’t legal advice.
Debit is much cheaper: One source lists Visa Debit interchange at $0.03 per transaction. Interac debit is typically a fixed-fee product. Steering customers toward debit, where practical, can reduce costs.

How to Find Out What You’re Really Paying

Get a full statement breakdown: showing interchange, network fees, and markup separately.
Check which interchange program you’re on: Confirm whether you’re receiving the small-merchant rates, and whether your volume qualifies under the thresholds above.
Segment your costs: Compare in-person vs online, consumer vs business cards, and domestic vs international.
Compare effective rate, not headline rate: Divide total fees by total sales.
Check for tokenization and data-quality benefits: Visa’s October 2026 changes bring DCAP to Canada, and tokenized online rates are lower in several sources’ schedules.
Review contract terms: for monthly minimums, PCI fees, and early-termination charges.

How to Reduce Your Costs

Move to interchange-plus if you’re on flat or tiered pricing and have meaningful volume.
Negotiate the markup. It’s the one layer you can influence directly.
Confirm small-business rate eligibility and watch the volume thresholds.
Encourage lower-cost payment methods such as debit, where it doesn’t hurt sales.
Use card-present or tokenized flows where possible.
Review surcharging carefully against competition and your customer base.
Don’t rely only on advocacy figures when planning. Model with your own statements.

Questions to Ask a Processor

Which pricing model am I on, and what’s my markup in each channel?
Am I receiving Visa’s and Mastercard’s small-merchant interchange?
How are network and assessment fees shown?
What happens to my pricing if I pass the small-business thresholds?
What are the cross-border and international card rates?
Are there monthly, PCI, or statement fees on top?
What are the surcharging and debit-steering options on your platform?

Final Thoughts

Canadian merchants pay a layered cost where most of the money is set by the networks and issuing banks, not the processor. Recent small-business programs have lowered the bill for eligible merchants, but premium cards, online sales, American Express, and international cards still push costs up. Look at the statement layer by layer, confirm which rate program you’re on, and negotiate the part you can.