Canadian Interchange and Processing Fees Calculator

Video Transcript

Transctipt of the video above edited for readability.

Hello, David here at Merchant-Accounts.ca. A constant challenge for merchants is knowing whether they have a good rate and whether another processor could lower their costs. The Interchange Plus pricing model makes it easier for merchants to understand pricing and negotiate a good deal, but that's easier, not easy. That's why we built a tool at Merchant-Accounts.ca. Today I'm going to show you how Canadian merchants can use this tool to determine your current pricing and the fees you're paying. If you've received a quote, it'll show you how much money you can save with a new processor. Stay tuned, and we'll dig in in one second.

Understanding Interchange

We're going to get right into how the tool works. In order to understand it, you need to know what interchange is. Interchange is set directly by Visa and Mastercard at a countrywide level. The processor that you choose for your processing does not change or impact the interchange cost in any way. It's usually updated twice per year around April and October, and the latest version is always on the Visa and Mastercard websites. On the Interchange Plus calculator tool that we've built, we have links directly to the latest interchange tables on both the Visa and Mastercard websites. At a high level, all you need to know about interchange is that the more premium the card is, the more expensive the interchange rate. That's a general rule for both Visa and Mastercard. Debit cards are the least expensive, and ultra-premium cards cost the most. When you look at the tool, you'll notice that we've built toggles for various special interchange programs.

Special Interchange Programs

Small Merchant Program

One of the best ways to lower your costs is to take advantage of special interchange reductions that Visa and Mastercard offer. In Canada, there's the small merchant program. At the time of recording in October 2026, it's available to any business that processes under $750,000 annually on Visa or under $175,000 annually on Mastercard. Now, these volumes may get updated from time to time, so check the Merchant-Accounts.ca tool or the Visa or Mastercard websites for the latest. The best thing about small merchant interchange is it's completely automatic. The way that the math works out is you can process up to roughly $40,000 per month in sales split between Visa and Mastercard, and it's roughly 0.1% saved. In some cases, it could be more. It's definitely worth doing. If you have a small business and you aren't sure that you're getting the Visa and/or Mastercard small merchant rates, it's absolutely worth reaching out to your processor to make sure. It's literally just free money that you're leaving on the table.

3D Secure and Recurring Payments

If you aren't sure you're getting it, or if you'd like a quote from us, reach out and we'll give you a quote. We make sure that all small businesses that qualify do get this rate reduction. A second toggle on the tool is for 3D Secure. 3D Secure: we have lots of content on it, about 3D Secure on the channel. Basically, it helps prevent chargebacks due to cardholder fraud. That's already awesome, but this gets better because Mastercard lowers your interchange cost by about 0.15% whenever you're using 3D Secure on your transactions. It stacks with the small merchant rate reduction. Together, you can save over a quarter of a percent if you use these tools. We have another toggle for recurring payments, which are designed for merchants that tokenize cards. They store cards and do subscription memberships, like a gym membership.

The cost savings depend on whether it's a Visa or Mastercard, but if you do recurring payments, you should tick this box because your costs are going to come down meaningfully. The final toggle is network tokens. Network tokens are for merchants that use services like Apple Pay, Google Pay, or Samsung Wallet. At the time of this video, the cost reduction only works out when the dust settles to around five basis points, but it's still a cost saving. You're also going to notice that you're going to get higher authorization rates, more approvals, because, for example, Google Wallet includes biometrics and the card issuer knows that the transaction has been authenticated at a higher level. It basically means you're going to see more approvals and fewer declined transactions. In summary, if you qualify for any of these programs, turn that toggle on because if not, you're literally leaving money on the table.

Scheme and Assessment Fees

Next are scheme and assessment fees. All of the interchange costs go to the card issuing bank. Visa and Mastercard make their money from it; it's called the assessment fee or the scheme fee. They're usually relatively small, about 0.1%. All you need to know here is that these fees exist and they go to Visa and Mastercard. If you're working with a good processor, they should absolutely not be marking up these fees in any circumstances. On that note, whenever you get a quote, you should get in writing from your processor that they are not marking up the card brand fees, the assessment fees, the scheme fees. Get them to confirm that everything is written at true bank cost. For any Canadian business selling to non-Canadian cardholders, there are assessments from Visa and Mastercard called cross-border fees.

Cross-Border Fees

These fees can be significant, up to about 1% extra. We have other content on the channel about these fees, and it's one of our core areas of expertise at Merchant-Accounts.ca. If you're paying a lot of cross-border fees, you need to make sure they're being passed through at cost without markup. In some cases, we can help you if you have multiple corporate presences. For example, if you also have a branch or office in the US, we can help you reduce your cross-border fees. If this is something that you're having a challenge with, consider reaching out to us at Merchant-Accounts.ca. This takes us to processor fees, which are the whole point of this video. This is the only part the processor actually controls. If you've taken advantage of the special interchange programs and you make sure that the assessment fees are all being passed through at cost, you've basically boiled it down so that you can receive a true interchange plus quote.

Processor Fees and Interchange Plus Pricing

At this point, it's simply the amount of money that the processor marks up and earns from a transaction. An example of a processing fee would be interchange plus 0.4%. That simply means that if a transaction's processed, and your quote was interchange plus 0.4%, the processor passes through the actual costs from Visa and Mastercard, then adds 0.4% as its markup. That's what you pay and how you achieve true cost control as a Canadian merchant. How to use the tool. Different card types can significantly affect the rates you pay. For example, if you're selling to students who have basic cards and got their first credit card on a college campus, your interchange costs will be different from those of a business selling high-end travel or Rolexes, where there's likely to be a lot of premium card usage.

How to Use the Calculator

In each section in the calculator, you can actually input how much volume for each particular card type you process. It lets you recreate your statement, or it lets you model out what your costs would be if you did more rewards cards versus more basic cards. It really lets you anticipate what your costs will be. If you're watching this video, you're trying to learn about interchange; you may have gotten a quote from someone, or you're looking at your statement and trying to break it down, which is almost impossible. It's so complicated. At Merchant-Accounts.ca, this is the one commitment we make. We do not hide fees. All interchange is written at cost, the assessments are written at cost, and we are completely transparent with our markup. If you are curious what you'd pay with us, please reach out. My contact details are in the video, or you can get in touch with us on the Merchant-Accounts.ca website.

Choosing a Processor and Controlling Your Costs

We would love the chance to quote on your business, and I hope I get the chance to hear from you. My final tip: once you've made sure that everything's written at cost and that it's been put in writing, and you've controlled your cost, but there are other concerns, make sure that you're on a month-to-month contract so that you are not locked in. You should never get into a fixed term contract unless you've worked with that processor for a really long time and you know you're very happy with the service. If you have been tasked with the unfortunate job of going and seeking quotes and figuring out if you have a good deal or not, share this video with other people in your organization that you might need to report to because there are so many ways in the payment processing industry to make a rate sound lower than it really is.

If you don't get written confirmation that everything is passed through at cost and that you're on interchange-plus pricing, then you have not controlled your costs. If you have to explain this internally, I know how hard that is; share this content, and maybe it will help you guys make a good decision at your organization.

Summary

In summary, if you're on interchange plus pricing, you've gone a very long way towards controlling your costs. If you're checking to make sure there's no markup on anything else, and if you're taking advantage of all the special interchange programs, you're operating at a pretty elite level of cost reduction. If you get a quote from us, you can know what you have and how your current pricing compares with what we could offer. We'd love a chance to hear from you. I hope you find the new tool that we've built useful. Thank you for watching, and have a nice day. Bye now.