Backgrounder: Government Review of Visa's and MasterCard's Voluntary Commitments

Study to Assess Effects of the Fee Reduction on Consumers and Businesses

In November 2014, Visa and MasterCard separately committed to voluntarily reduce the fees they charge for the use of their cards, which are known in the industry as interchange fees.

Their respective undertakings were to reduce their interchange fees to an average annual effective rate of 1.50 per cent in each of the next five years. Those voluntary commitments took effect in April 2015.

The Department of Finance Canada will conduct an assessment of the marketplace, taking into consideration the impact of recent developments, the adoption of the Code of Conduct for the Credit and Debit Card Industry in Canada, the financial sector framework objectives of competition and utility, as well as approaches in other jurisdictions.

The Code of Conduct, which was updated in 2015, includes a requirement that any interchange rate reductions should be fully passed on to merchants, or merchants may cancel their contract without penalty.

The Department of Finance Canada's assessment will also take into account the recently received third-party verifications of the respective voluntary undertakings of Visa and MasterCard.

The third-party verifications released today evaluated the 12-month period from May 1, 2015 to April 30, 2016. Those reports found that both Visa and MasterCard met their respective commitments, which include reductions for small and medium-sized enterprises and charities.