Amex fees to be slashed for some small businesses

(An American Express credit card is seen on a computer keyboard in this picture illustration taken September 6, 2017. REUTERS/Philippe Wojazer/Illustration)

If you’re used to hearing “no” from small businesses when you ask “do you take American Express?” you may soon be in for a surprise.

An agreement has been reached with the Canadian Federation of Independent Businesses (CFIB) and Chase Merchant Services that will lower American Express fees for member businesses.

Notorious for having high interchange fees, Amex charges stores who accept their cards a fee of between 3 and 3.5 per cent on every customer transaction with the card. Visa and Mastercard charge an average of 1.5 per cent for non-premium cards.

“Many of our members could see significant savings with the new offer, for some this could represent a rate reduction of almost 50 per cent,” said CFIB President and CEO Dan Kelly in a press release. “This will benefit CFIB members by lowering the cost of offering Amex as a payment option, while ultimately providing value to consumers with greater access and payment choice.”

It’s a huge win for small businesses who deal with these fees. Large companies are in a better position to negotiate with the credit card companies for better rates. The most notable and public example of this took place in 2016, when Walmart temporarily stopped accepting Visa credit cards in a dispute with the company over fees.

But without the clout of a multi-million dollar corporation, most small businesses are left paying the fees as they are. In 2011, a class action lawsuit was filed on behalf of small business owners, seeking to reduce the fees paid by businesses for accepting cards.

Some work has been done by the credit card companies themselves — Visa and MasterCard, in a 2014 deal with the Canadian government, agreed to voluntarily reduce the fees on their cards for five years, bringing them to their current rates.

And Amex has been actively involved in the reduction of rates through the CFIB-Chase deal.

“This is part of our ongoing commitment to the small business community, designed to make it easier for them to do business with us by enabling acquirers like Chase to provide payment processing, servicing and pricing to small merchants,” said Kerri-Ann Santaguida, Vice-President & General Manager, Merchant Services, American Express Canada in a press release.

However the solution is limited, as it only applies to CFIB members, and those who adopt Chase payment systems. And it doesn’t fix the fact that Canada’s interchange fees remain high compared to other countries. In Britain, for example, interchange fees are capped at 0.3 per cent, according to The Globe and Mail.

The Retail Council of Canada has said that it is waiting for a national strategy to better manage interchange fees from credit card companies. Finance Minister Bill Morneau has previously said that he’ll be looking into credit card fees, however there was no mention in the most recent budget of any national strategy.

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