Visa and MasterCard have submitted separate and individual voluntary proposals to the Canadian government reduce to their credit card fees to an average effective rate of 1.5% for the next five years.
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Joe Oliver, Minister of Finance, said: "In total, the two commitments represent a reduction in credit card fees of approximately 10%. These commitments represent a meaningful long-term reduction in costs for merchants that should ultimately result in lower prices for consumers."
"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," Oliver added.
The proposals from Visa and MasterCard will ensure that all merchants receive a reduction in credit card fees, provide a greater reduction for small and medium sized enterprises and charities, and require annual verification by an independent third party to ensure compliance.
Rob Livingston, Visa country manager, Canada, said: "With the interchange pricing issue behind us, Visa looks forward to continuing to work closely with financial institutions and merchants across the country to create and deliver safe, reliable, easy-to-use, and innovative payments tools for Canadians."
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By GlobalDataBetty DeVita, president, MasterCard Canada, said: "We continue to maintain the balance for all our stakeholders in the payments industry. We brought forward a voluntary solution that avoids the unintended consequences of regulation as we have seen in other countries."
Visa and MasterCard have agreed to start implementing the reductions no later than April 2015.
