New Government Support for Small Business: Lowering Transaction Fees in Canada

Running a small business isn’t easy. You’ve got employees to pay, bills to cover, and rent to manage. Every little cost adds up. But what if there was a way to cut down one of those costs? The Canadian government is stepping in to help with new support aimed at lowering credit card transaction fees.

If you’re a small business owner, you know how quickly those fees can eat into your profits. So, could this new plan be the big break small businesses have been waiting for?

Let’s break down the new government support for small- and medium-sized businesses (SMBs) in Canada. We’ll explain how lower fees, rebates, and other measures could save you money and help your business grow. And we’ll keep it simple and straightforward.

What’s in the New Plan?

On October 1, 2024, Canada’s Deputy Prime Minister Chrystia Freeland made an important announcement. Alongside other government officials, she revealed a new set of measures aimed at helping small- and medium-sized businesses. One of the key points? Lower credit card fees.

Starting October 19, 2024, small businesses that accept credit cards will see their transaction fees reduced by up to 27%. For many businesses, this will make a big difference. If you run a store that processes $300,000 in credit card payments each year, this change could save you over $1,000 annually.

This isn’t just about credit card fees, though. The government also introduced the Canada Carbon Rebate for Small Businesses. This rebate is aimed at giving back a portion of the fuel charge proceeds from recent years to businesses across the country.

Lowering credit card fees might seem like a small move, but for small businesses, every bit counts. The government has negotiated deals with major credit card companies like Visa and Mastercard to make this happen. It’s all about helping small businesses keep more of the money they earn.

Why Do Credit Card Fees Matter So Much?

If you’ve been running a business for any length of time, you know that credit card fees can add up fast. Every time a customer pays with a credit card, the business has to pay a percentage of that sale to the credit card company. This fee is called an interchange fee.

For small businesses, especially those that deal with a high volume of transactions, these fees can really eat into profits. Imagine you process $300,000 in credit card payments each year. Before these changes, you might be paying around $4,000 just in transaction fees. That’s a lot of money going out the door. But with the new fee reductions, you could save over $1,000 every year.

That might not sound like a lot, but over time, it adds up. And for small businesses, that extra money could be reinvested into hiring staff, expanding your store, or simply keeping your doors open.

How Will Small Businesses Benefit?

So, how exactly will these changes help small businesses across Canada? There are a few key ways.

First, lower transaction fees mean more cash in your pocket. With reduced fees, small businesses will have more money to spend on growing their operations, whether that’s hiring more staff or investing in better equipment.

Second, the new Canada Carbon Rebate is set to give back a portion of the fuel charges businesses have paid in recent years. Depending on the size of your business, you could receive thousands of dollars in rebates. Businesses with 10 employees in Ontario, for example, could receive up to $4,010, while larger businesses with 50 employees in Alberta might see rebates as high as $29,550.

Third, the government’s revised Code of Conduct for the Payment Card Industry will help small businesses compare prices and offers from different payment processors. This will make it easier for business owners to shop around and find the best deal. Plus, the time it takes to resolve complaints with payment processors will be reduced, which could save businesses even more time and money.

All these changes are designed to make running a small business easier and more profitable.

How Much Will Businesses Save?

Let’s get into the numbers. Over the next five years, the government expects small businesses to save about $1 billion in credit card fees. For individual businesses, this could mean thousands of dollars in savings each year.

For example:

• A small business in Ontario with 10 employees could save up to $4,010 a year in fees and rebates.
• A larger business with 50 employees in Alberta might save closer to $29,550.
• In Saskatchewan, a business with 499 employees could see savings of up to $576,844 through the rebate program.

These are real numbers. They represent money that can be put back into your business instead of going toward fees and fuel charges.

What Should Businesses Know?

Now, there’s no real downside to these changes. The lowered fees don’t come with any catches or hidden costs. However, there are a few things business owners should be aware of.

First, businesses need to make sure they file the necessary paperwork to qualify for the Canada Carbon Rebate. If you haven’t filed your 2023 tax return yet, you’ll need to do so by December 31, 2024, to receive your payment.

Also, while most of the fee reductions will take effect by October 19, 2024, some parts of the new Code of Conduct for payment processors won’t be in place until April 2025. So, while businesses can start benefiting from lower fees right away, there’s more to come in the future.

What’s Next for Small Businesses?

This new plan from the Canadian government is just one step in a series of efforts to support small businesses. The tax cuts announced in Budget 2022 are still helping small businesses save money on taxes, and now, these new fee reductions will help further ease the financial burden.

Small businesses are at the heart of Canada’s economy, and the government seems committed to helping them thrive. From tax cuts to fee reductions, these changes reflect a growing focus on helping entrepreneurs succeed.

Time to Take Advantage of Lower Fees

If you’re a small business owner in Canada, now’s the time to take advantage of these new measures. Whether it’s lower transaction fees or rebates through the Canada Carbon Rebate, there are real savings to be had.

Start looking into how these new government supports can help your business keep more of what it earns. Lower fees mean more money in your pocket—money that can go toward growing your business, investing in new products, or simply making your day-to-day operations a little bit easier.