Federal Government Takes Action to Reduce Credit Card Fees Paid by Charities

In their latest pre-budget submission to the Select Standing Committee on Finance, Imagine Canada recommended that the federal government take action to reduce fees paid by registered charities when they accept donations or payments for goods and services paid by credit card. These fees add to charities' administrative costs and divert significant dollars away from the cause.

The federal government has announced a voluntary agreement with MasterCard and Visa for the reduction of credit card fees to an average effective rate of 1.50% for the next five years. The new rates will take effect no later than April 2015. 

Charities will benefit from steeper reductions than other categories of merchant. Imagine Canada has detailed the changes in its latest Issue Alert, provided below.  

In the case of MasterCard, a new merchant category has been created for charities. The current interchange fees paid by charities range from 1.59% to 2.65% of the transaction value. As of April 1, the interchange fees that MasterCard charges charities will fall to between 1.0% and 1.5%. This represents, in effect, an almost 40% reduction in these fees for charities.
 
Visa has opted to include charities within its “emerging segments” merchant category. The new interchange fees, as of April 1, will be 0.98% for transactions using Classic, Gold, or Platinum cards (a 40% reduction), 1.17% for transactions using Infinite cards (a 35% reduction), and 1.95% for transactions involving Visa Infinite Privilege cards (a 25% reduction). 

A statement from the Honourable Joe Oliver, Minister of Finance, also read: 

"If Visa or MasterCard do not comply with their public commitments the Government will take all necessary measures to keep prices low for all consumers.

“The Government is currently examining potential changes to the voluntary Code of Conduct for Debit and Credit Cards, which it hopes to announce in the near future."

Imagine Canada hopes for ongoing discussions with the credit card companies about other unintended consequences of the current rate structure and other opportunities to reduce costs for charities. They intend to pursue the surcharge for "card not present" transactions - those made online or by phone. The surcharge is added to those transactions with the rationale that they are more susceptible to fraud, however Imagine Canada does not believe that charities and donors should be forced to pay a premium for the highly unlikely risk of fraudulent donations or purchases from charities. They also plan to explore ways to mitigate the impact on charities when cards are issued with new account numbers.

For more details, or to share your feedback with Imagine Canada, visit their website

 

©2015 Alliance for Arts + Culture. All rights reserved | Privacy Policy