Short answer: Every credit card sale pays three parties: the bank that issued the card (interchange), the card network such as Visa or Mastercard (assessment), and your processor (markup). Debit is usually a small per-transaction charge. The number that tells you what you really pay is your effective rate: total fees divided by total card sales.
The three parts of a credit card fee
- Interchange goes to the cardholder’s bank. The card network sets it, and it varies by card type: premium and business cards cost more than basic ones, and online sales usually cost more than tapped or inserted cards.
- Assessment (network fees) goes to Visa, Mastercard or American Express.
- Markup is the processor’s margin, and the only part a processor actually controls.
On a flat-rate plan you see one percentage that bundles all three. On interchange-plus you see interchange and assessment passed through at cost, with the markup shown separately. Our interchange-plus vs flat rate guide compares the two with a worked example.
The 2024 cut for small businesses
The federal government finalized agreements with Visa and Mastercard that lowered credit card interchange for qualifying small businesses starting October 19, 2024. Businesses with annual Visa sales under $300,000, or annual Mastercard sales under $175,000, qualify for an annual weighted average interchange rate of 0.95% on domestic consumer credit cards taken in store. The government described it as a reduction of up to 27%. (Department of Finance Canada)
The catch: you only see that saving if your plan passes interchange through. On a flat rate, the percentage you pay doesn’t move when interchange falls. That is one reason our Variable plan (interchange + 0.20% on credit) can work out cheaper for small businesses than the headline numbers suggest.
What debit costs
Interac debit is usually priced per transaction rather than as a percentage. On our Variable and Surcharge plans debit is a flat $0.05 per transaction; on Fixed it is 0.75% + $0.07. For shops where most customers pay by debit, such as convenience stores and grocers, the debit price can matter more than the credit rate.
Fees to look for on any statement
- Monthly account, statement or software fees
- Monthly minimums that charge you even in a slow month
- PCI compliance or “non-compliance” fees
- “Non-qualified” or tiered surcharges on rewards and business cards
- Terminal rentals that never end in ownership
- Early cancellation fees and auto-renewal dates
The Code of Conduct for the Payment Card Industry in Canada requires clear statements and advance notice of fee increases, and gives you the right to cancel without penalty when fees go up. If you cannot tell what you are paying from your statement, ask your provider to explain it line by line.
How to work out your effective rate
Take one recent monthly statement. Add up every fee charged that month, then divide by your total card sales. If you paid $640 in fees on $25,000 of card sales, your effective rate is 2.56%. Compare that number, not a headline rate, against any quote. For a comparison on your own numbers, use our cost calculator or send us the statement.
Can you pass the fee on to customers?
In most of Canada, yes, within card network rules: a credit card surcharge is capped and must be disclosed, it can’t be applied to debit, and Quebec does not allow it. Our surcharging guide covers the rules, and our Surcharge plan charges 2.40% to the cardholder where permitted.
Processing fee questions
What is a normal credit card processing fee in Canada?
It depends on the plan and your card mix. As a reference point, our published Fixed plan is 2.50% on credit, and our Variable plan passes through interchange and assessment and adds 0.20%. The best comparison is your effective rate: total monthly fees divided by total card sales.
Who sets interchange fees in Canada?
The card networks, such as Visa and Mastercard, set interchange, and the federal government has negotiated reductions with them, including the cut for qualifying small businesses that started October 19, 2024.
Are debit fees lower than credit card fees?
Usually, yes. Debit is typically a small charge per transaction. On our Variable and Surcharge plans it is $0.05 per debit transaction.
How do I lower my processing fees?
Find your effective rate, remove fees you don’t need (monthly minimums, PCI fees, endless rentals), and choose a plan that fits your card mix: interchange-plus for higher volume or lots of basic cards, flat rate for simplicity, or a surcharge program to pass the credit card cost to the cardholder where permitted.