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September 22, 2023
by David Goodale

Don't Accept Rate Increases from your Credit Card Processor

(Slightly edited from video transcript for greater readability)

Key Takeaways

Rate Increases Should Almost Never Happen
Although some processors have a "standard practice" of raising rates it's not acceptable, and is an unethical business practice unless there is a specific reason for the rate increase.
Find Out Why Your Rate Was Increased
Once you've been notified of a rate increase you need to reach out and ask why this occurred. Have you recently had a lot of chargebacks, or has something dramatically changed about your business?
Consider a New Processor
If the processor can't give you a good reason for the rate increase then you should cancel your agreement and switch to a payment processor that will treat you better. In Canada all merchants are protected from this by the Code of Conduct and can switch to a new processor penalty free upon receiving a rate increase 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 Today we're tackling the topic of when is Merchant repricing fair. When your rates get raised by your processor, what can you do? Stay tuned. We'll dig in in one second.

rate increase

Rate Increases

Rate increases are almost never fair, and generally speaking should not happen. What's surprising is that a lot of merchants seem to accept rate increase, as if it's an inevitability. It should not be like that and a good payment processor will not treat you like that.

To be explicitly clear: rate increases should rarely happen. If nothing has changed with your business or processing activity, and nothing has changed with interchange, the rate increase is almost never warranted.

When is a Rate Increase Reasonable?

Let's start by looking at examples of when it would be reasonable. Well, the first time that it could arguably be reasonable is, let's say that you have a flat rate. Maybe a merchant has a flat rate of 2.2% as an example plus interchange. Now I have other content on the channel about what interchange is, but simply put it means cost from Visa and MasterCard to the payment processor.

If you pay 2.2% for a transaction, your processor doesn't make 2.2%. They they had to pay Visa and MasterCard, their interchange fees and got to keep what was left.

Now, if the interchange costs go up significantly and you're on a flat rate, the payment processor's cost is higher than the rate that you're paying, well that would make sense that they would have to raise your rate in that situation. Let me be super clear, that is extraordinarily rare. Very few merchants would be on flat pricing that's low enough that a payment processor would have to raise the cost to you in the event of an interchange increase. That payment processor should have you priced so that they're making enough money that if there are little fluctuations in the cost from Visa, or MasterCard, it shouldn't matter. They should just absorb the interchange increase.

Common Causes of Rate Increases

I'm just giving you one example where a rate increase could make sense. Now, something where it would easily make sense is if the risk has dramatically changed on your account. Maybe you had a store that was for example selling sweaters and t-shirts, and then you started a pot dispensary. Is that a higher risk? I don't know. Maybe it is. My point is, that if something dramatically changes about your business, then it might make sense to revisit the rates.

Now, another situation where the rate could go up is if you get excessive chargebacks. That's where your customers are calling their bank that issued the card and saying, hey, this merchant ripped me off. I never got what I paid for. If you're getting a ton of chargebacks that are out of control, well, yes, there's an argument that your rate should go up because there's a lot more work going on behind the scenes with the payment processor.

rate increase

They're also exposed to the potential for losses from chargebacks or fines from the card brands because the payment processor does get fined when their merchants get excessive chargebacks. Those are the examples that I can think of when it could arguably be a possibility. Stay tuned because I'm going to talk in a second about what you can do about it.

Why is Your Rate Increasing?

The first thing that you should do is ask your payment processor, hey, why is my rate going up? They should be able to tell you exactly why they're doing a rate increase. If their answer is anything remotely along the lines of this as a standard rate increase, well then, it's time for you to cancel your agreement with that garbage processor. That should never happen. Little plug for us at, we never do rate increases. I can think in 22 years I had one merchant where we had to do a rate increase because they were European and interchange changed dramatically on international sales and they were okay with it because we explained it to them.

rate increase

Cancel Agreement

We would never arbitrarily increase a rate on a merchant. If your payment processor increases your rate, and if you're Canadian, when you go to contact them you can say, hey, you raised my rate, so I'm canceling.

They might try and reference your contract. Oh, you're on a two-year agreement, you're on a three-year agreement. It doesn't matter, you are protected. There's something called the code of conduct in Canada. It says if your payment processor increases your rate, you can cancel your agreement regardless of the term remaining on your contract. If they raise your rate, you cancel that agreement and you find a better processor like us at or any processor as long as they're not doing rate increases.


If you have had a rate increase, you should do something about it. Don't just accept it. One last thing to keep in mind, is if they are raising your rates because of something that's happened, go back to them and say, hey, if I get my house in order, if my chargebacks come back down, I want a rate reduction. You should be able to negotiate a rate reduction when whatever issue caused the increase is resolved. (Such as excessive chargebacks). Thanks for watching. Have a nice day 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.
February 14, 2023
David breaks down the current interchange rates for e-commerce merchants in Canada for 2023. These figures were taken directly from the Visa and Mastercard Canada interchange tables. These interchange rates apply not just to e-commerce transactions but also virtual terminal and other card-not-present type transactions.
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.
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.
April 22, 2024
In this quick video, David explains the simple math to help you figure out what your discount rate will be per month.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant 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.

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