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February 14, 2023
by David Goodale

Canadian E-commerce Interchange Rates for 2023

(Slightly edited from video transcript for greater readability)

Key Takeaways

1
Interchange rates
Interchange rates are set by country. Every credit card processor in your country receives the same interchange cost structure.
2
Interchange plus pricing
Allows you to receive pure and transparent directly from Visa / MC, plus a clearly disclosed processing fee from your payment processor.
Need help with this topic? Or a rate quote?
Whether its questions about this article, or you want to see how we can lower your costs. Don't hesitate to contact us.

Hello David here at Merchant-Accounts.ca. Today I'm tackling the updated Canadian interchange rates for e-commerce merchants for January 2023. Stay tuned, we'll dig in in one second.

Interchange Rates Update

Interchange is typically updated once per year in April. While I'm recording this in January 2023, these rates will be good until April and they may be good across the remainder of the year. It's not possible to always know what changes are made to interchange. What is interchange? I have lots of other content on that, here is a short version: "Every time a merchant processes a transaction, your payment processor will charge you a rate, say 3% per transaction. They don't get to keep the 3% we have to pay Visa and Mastercard. All payment processors incur this cost from Visa Mastercard. The industry term used to describe that cost is called interchange." The type of card used, like a very basic card versus a fancy air miles card impacts the interchange cost. That is what we're going to explore today. Now I'm going to post some summarized charts and links taking you to the Canadian Visa and Mastercard interchange tables for 2023.

Visa

We'll start though with Visa. We're specifically looking at the "card not present" transactions. These are e-commerce transactions. Classic, Gold and Platinum cards have an interchange rate of 1.4%. Infinite Visa cards have an interchange rate of 1.65%. Infinite Privilege cards, which is like the fanciest level of Visa cards in Canada is 2.4%. That's quite an expensive card for merchants to process. Offsetting these high Interchange cards are debit cards. Debit cards are quite affordable. They have an interchange rate of 1.15% for corporate cards, which is a credit card that's issued to a company as it might say, John's Landscaping on the front rather than, John Smith the business owner. Examine the tables directly below.

Fee Program Classic, Gold, Platinum Infinite Visa Infinite Privilege
Card Not Present - Tokenized 1.35% 1.60% 2.35%
Recurring Payments 1.25% 1.53% 1.95%
Recurring Payments - Tokenized 1.20% 1.48% 1.90%
Standard 1.45% 1.70% 2.45%
Fee Program Visa Debit
Recurring Payments 0.60%
Standard 1.15%
Source: Visa Interchange

Mastercard

Mastercard has business cards that have an interchange rate of 2%, we're going to be talking about the digital commerce tier of interchange, which is for e-commerce transactions. The Mastercard Core card, the basic Mastercard has an interchange rate of 1.67%. Mastercard World has an interchange rate of 1.9%. Mastercard World Elite is 2.13% and the Muse Mastercard is 2.25%. The fancier cards are the debit cards, which are the same as Visa at 1.15%. Now interestingly with Mastercard specifically, you can get lower interchange rates if you use 3DSecure, which is a great service. I have other content about 3DSecure, the very short version is it's a second step in the checkout process. If you put the customer through the second step, you cannot get a chargeback for fraud. It's a much more secure transaction. If you do that, Mastercard will reward you with a lower interchange rate. One last comment, with 3DSecure version two, the latest version of 3DSecure is usually frictionless. Most of your customers will not realize it was a 3DSecure transaction. It's quite a good product. Take a look at the table below to compare Mastercard interchange rates.

Interchange Program Type Core World World Elite Muse Mastercard Debit
Digital Commerce 1.67% 1.90% 2.13% 2.25%
SecureCode / 3DS 1.50% 1.67% 1.90% 2.03%
Standard 1.15%
Source: Mastercard Interchange

Demographics

What you might also consider is what card types are going to be most popular for you. Think of your customer demographics. Are you doing consulting on how to get out of debt or are you renting private Lear jets? Well, if you're selling, you know, Rolexes and Rare Blue Diamonds, you're going to get a lot of the fancier cards. If you're doing targeting for maybe younger folks, a less wealthy demographic, you will get more basic cards and debit cards and that's going to be what you find when you break out your statement at the end of the month. There's one more thing that I want to talk about, which is card brand fees. All of the interchange fees that we just discussed, don't go to Visa or Mastercard, they go to the issuing bank that gave that card to the cardholder.

Some examples

Now, Visa and Mastercard earn fees too. Fortunately, their fee is very small. It's called the card brand fee. It is 0.09%. That's the part that goes to Visa and Mastercard. If we go back to the example of the Mastercard, let's just go with the basic Mastercard, 1.67%. Then you have to add on the 0.09% card brand fee for Mastercard, which is going to take you to 1.76%. That's your true all-in cost to a merchant. If you process a basic Mastercard and you pay more than 1.76%, which you probably will, you should because you have your payment processor has to earn something. That's the amount that the payment processor earning. Just as an example, if I had a merchant on a rate of interchange plus 1% and they processed a core, basic core Mastercard in Canada, the interchange cost would be 1.76%. We would add on our 1% and it would become 2.76%. That's the fee that you would pay as the merchant. Just for clarity, that's not our default rate. Merchant-Accounts.ca rates are quite a bit lower than that. I just used 1% because it was easy math and it seems easier for our viewers to digest and understand. I hope that was helpful.

Breakdown of example transaction fees

Card Brand Fee 0.09%
Interchange (goes to card issuer) 1.67%
Pament Processor Fee 1.00%
Total Transaction Fee 2.76%

Conclusion

That's a very quick breakdown of interchange in Canada for 2023. Check out the links to the Visa and Mastercard interchange tables and we have lots of other very exciting interchange content if such a thing exists on our website at Merchant-Accounts.ca. Thanks for watching and have a nice stay there. Bye now.

Related Topics
September 16, 2022
Knowledge of credit card processing pricing models can save your business money. In this article we describe the Interchange Plus Pricing model for merchants. We'll compare it briefly to other models, state its advantages, disadvantages and give a practice example.
March 29, 2023
Why do some businesses get lower credit card processing costs than others? In this video David explores the criteria that cause some businesses to get lower rates than others and techniques that you can use to reduce your processing costs.
June 21, 2017
It is extremely frustrating for merchants to be notified of an increase to your credit card processing rate. In many cases, these increases may be unfair and add unnecessary additional expense to your business. Fortunately, there are protections in place that can help protect your business should this happen to you.
June 24, 2020
Visa and Mastercard charge a very small fee called a card brand fee (also sometimes called an assessment fee). We will explore these costs and explain when they are incurred. Learn more about Visa and Mastercard assessment fees.
September 22, 2023
Some payment processors have a 'standard practice' of raising credit card processing costs on merchants. This is dishonest and unethical. In this video David explains when rate increases are reasonable (which is very, very rarely), and how to fight back when it does occur.
October 10, 2023
Some merchants that use Shopify express frustration over the Shopify percentage based fees that are charged per transaction. In this video David explains why payment processors charge percentage based fees (because of interchange fees and chargeback risk), and why most shopping cart software providers charge a monthly fee, but don't charge percentage based fees. He also discusses some options that some merchants have used in an attempt to lower their Shopify processing costs.
December 08, 2023
How much are credit card processing fees in Canada? Use our interchange chart and fee calculator to determine your exact processing costs.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant Accounts.ca. I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

Toll free: 888-414-7111 ext. 5
Direct: (905) 901-2254
david.goodale@merchant-accounts.ca