Jean-Yves Duclos announces breaks affecting payment card fees and Canada Carbon Rebate
While maintaining that Canada’s small- and medium-sized businesses “keep main streets flourishing across the country, create good-paying jobs and deliver the dream of entrepreneurship,” federal Minister of Public Services and Procurement Jean-Yves Duclos has announced payment amounts for the latest Canada Carbon Rebate for Small Businesses.
Speaking on behalf of the Trudeau government, he said this latest phase of the rebate program will deliver over $2.5 billion to about 600,000 Canadian businesses before the end of this year.
“It is essential that these businesses thrive so they can continue being the bedrock of our communities and our economy,” Duclos, who now is also the Liberal government’s Quebec Lieutenant after Pablo Rodriguez’s announced departure, said in a statement.
Revisions for payment cards
“Small and medium sized businesses are an integral part of communities in Quebec and across the country,” added Duclos.
According to the Liberal government, the refundable tax credit will return a portion of the fuel charge proceeds from 2019-20 through 2023-24 to small businesses, in jurisdictions where the federal fuel charge applies.
Although Quebec has its own provincial carbon pricing system, businesses in Quebec may still qualify for the federal carbon rebate, providing they meet the eligibility requirements, including having 499 or fewer employees.
At the same time, Duclos announced a revised “Code of Conduct for the Payment Card Industry in Canada” to protect over 1 million businesses that accept credit card and debit card payments from customers.
“The federal government is making life easier for locally owned businesses by introducing reduced credit card transaction fees and delivering the Canada Carbon Rebate for small businesses,” Duclos said regarding these measures.
Payment card issuers on board
“The federal government understands the importance of investing and protecting good paying jobs in Quebec and in Canada,” he continued.
The government says that starting this October 30, the revised code should help businesses compare prices and offers from different payment processors, and shorten the complaint handling response time by nearly 80 per cent to just 20 business days.
All major payment card network operators in Canada have agreed to the terms of the revised code. Certain obligations requiring complex or technical system changes will come into effect by April 30 next year.
In addition, the government announced that new, reduced credit card transaction fees for small businesses will take effect this October 19. In accordance with that, more than 90 per cent of small- and medium-sized businesses that accept credit cards will receive lower rates and see interchange fees reduced by up to 27 per cent.
Fee reductions for SMEs
The government says these fee reductions are expected to save eligible small businesses about $1 billion over five years. Reduced credit card transaction fees are also expected to save individual small businesses thousands of dollars every year.
For example, if a store processes $300,000 in credit card payments, they currently pay nearly $4,000 in annual fees. With these new agreements, the store could save $1,080 in fees every year, according to the government.
The government says it is taking these actions now to help businesses start up, grow and thrive by reducing the costs of running a business. The government’s statement noted that the new supports build on a lowering of the small business tax rate to 9 per cent – saving small businesses $6 billion every year, according to the government.
Modified small business tax
In the 2022 federal budget, the Liberal government modified small business taxes further by making the 9 per cent federal small business tax rate available to more businesses as they grow, saving businesses another $660 million in taxes over 2022-23 to 2026-27, claims the government.
As for the Canada Carbon Rebate for Small Businesses, the government says businesses will not have to apply for it. Rather, the Canada Revenue Agency will determine and automatically issue the rebate amounts to eligible businesses based on the payment rates of each applicable province for the corresponding fuel charge years, as specified by the Minister of Finance.
The rebate will be available to eligible Canadian-controlled private corporations that had 499 or fewer employees in Canada throughout the calendar year in which the applicable fuel charge year began.
The government said that Visa and Mastercard (the dominant players in the payment card industry) have agreed to reduce domestic consumer credit interchange fees for in-store transactions to an annual weighted average interchange rate of 0.95 per cent.
Visa and Mastercard comply
As well, they agreed to reduce domestic consumer credit interchange fees for online transactions by 10 basis points, resulting in reductions of up to 7 per cent; and to provide free access to online fraud and cybersecurity resources to help small businesses grow their online sales while preventing fraud and chargebacks.
Small businesses with annual Visa sales volume below $300,000 will qualify for lower interchange fees from Visa, and those with annual Mastercard sales volume below $175,000 will qualify for lower fees from Mastercard. Non-profit organizations with transaction volumes below these thresholds will also benefit from reduced rates, according to the government.
