The federal government has announced further details in their agreement with Mastercard and Visa that brings good news for small farmers across Canada.
Deputy Prime Minister, Chrystia Freeland, outlined plans to reduce credit card processing rates for small businesses. This move is important for farmers who focus on farm gate sales. Lower credit card fees will encourage farmers to take advantage of credit card transactions right at their doorstep and encourage the growth of direct selling on farms.
As part of the new plan, small businesses that generate up to $300,000 in annual Visa sales and $175,000 in annual Mastercard sales will qualify for a lower average rate of 0.95% for in-store transactions. Additionally, there will be a decrease of 0.1% in fees for online transactions.
According to an analysis done by the Canadian Federation of Independent Business (CFIB), these adjustments are estimated to save small business owners up to 27% on credit card processing costs.
Although the official implementation is planned for fall 2024, CFIB recognizes the impact this will have on profitability for small businesses and is advocating for an earlier rollout. They are also encouraging other card brands, such as American Express, to make the same reductions for small business owners.
Credit card processing fees have often been a challenge for small farmers. These fees can reduce profit margins, making it difficult for farmers to maintain a viable farmgate operation. However, the lower interchange rates and reduced online transaction fees will help alleviate this financial burden, enabling them to improve profitability and sustainability.
Additionally, farmers who previously could not offer credit card payment options may now be more inclined to add it as an option to further broaden their customer base and make supporting local agriculture more accessible.
With this agreement on the horizon, small farmers can focus on what they do best: providing fresh, locally produced goods to Canadians, without the added stress of high credit card fees.