Stripe is a major provider of payment processing online, including through a partnership with Shopify.DADO RUVIC
Payment processor Stripe Inc. says it won’t reduce merchant fees on its standard plans despite Ottawa’s recent deals with Visa and Mastercard that sought to lower transaction costs.
The federal government last week announced a deal it reached with credit-card giants to reduce transaction fees for small merchants will go into effect on Oct. 19. Businesses that earn less than $300,000 in annual revenue through Visa credit cards and less than $175,000 in annual revenue from Mastercard customers qualify for the reductions.
Those merchants are supposed to see fees drop 10 basis points (one-10th of a percentage point) for online purchases. The average interchange rate – which merchants pay for transactions – for all businesses in Canada is 1.4 per cent, but varies widely depending on industry and type of payment.
But standing between the merchants and the credit-card companies are payment processors – and Stripe said that customer pricing on its standard plans will remain the same despite the savings it receives from Visa V-N and Mastercard MA-N.
Stripe is a major provider of payment processing online, including through a partnership with Shopify Inc. They also process payments for Lightspeed Commerce and Skip The Dishes. (Shopify and Skip The Dishes did not respond to a request for comment, while Lightspeed declined to comment.)
Matthew Burlak, head of Canada Go-To-Market at Stripe, said the company was holding pricing for merchants on its standard plan the same because the network costs and various fees that it pays have gone up.
“In the aggregate, costs for processing payments in Canada have gone up, but we’ve decided to keep our Standard pricing the same,” he said in an e-mail.
However, businesses on its “interchange plus” plans, which varies the rate based on transaction type, would see the change in fee structure, Mr. Burlak said. This plan type is cost-effective for businesses with a high volume of sales or high-value transactions, according to the company’s website.
Mark Carney, former governor of the Bank of Canada, joined Stripe’s board of directors in 2021. In September, Mr. Carney said he would chair a task force on economic growth for the federal Liberal Party.
Ottawa said it expected all parts of the payments system to pass on the lower negotiated fees.
“The federal government is closely monitoring the implementation of the credit card fees reduction, with the strong expectation that all payment processors like Stripe will pass the savings on to small businesses,” Department of Finance spokesperson Marie-France Faucher said in a statement.
Ms. Faucher said small-business owners have the right to be notified in advance if a processor is not passing on a fee reduction and can switch to a different processor without penalty if they choose.
Meanwhile, other processors have said they will pass on savings to customers. Square said in a blog post published Tuesday that its new rate will be 2.5 per cent per transaction for in-person card payments, down from 2.65 per cent. Online payment fees will be 2.8 per cent per transaction plus 30 cents, down from 2.9 per cent plus 30 cents.
Dan Kelly, president of the Canadian Federation of Independent Business, said Stripe should make the “right decision” and reduce its fees in line with other payment processors.
“It is outrageous that any company would make the decision to just grab the Visa and Mastercard reductions intended for very small businesses,” he said.
Ottawa said the price reduction will save eligible businesses about $1-billion over five years, though some business groups have said the thresholds are so low as to exclude large numbers of small businesses, such as convenience stores.
Editor’s note: A previous version of this article incorrectly stated that interchange rates vary depending on geography. Geographical criteria such as province and city do not affect fee calculations. This version has been updated.