Lower your fees, Mark Carney, businesses ask Liberal bigwig after his payments company hoards savings from merchants

OTTAWA — Not all Canadian small businesses will be benefiting from new lower credit card fees arranged by the federal government because one major payments processor says it won’ be passing along its savings to many of its merchants. And one of the directors of the payments company, Stripe, is Mark Carney, an economic adviser to Prime Minister Justin Trudeau and Liberal party heavyweight.

In December 2023, the Liberals reached a deal with credit card giants Visa and MasterCard to lower the fees small businesses pay on credit card transactions, which takes effect this month. But payments processor Stripe, in a note to its customers, said it would not be passing along savings to many customers because of other increases in fees and charges it has experienced.

Carney has sat on Stripe’s board of directors since 2021.

Canadian Federation of Independent Business president Dan Kelly said it’s outrageous that Stripe isn’t passing along the savings.

“The bank is reducing its share of the fees set by Visa and MasterCard, but the savings are supposed to be passed on to small business, and Stripe has said, ‘we’re just going to keep that reduction in fees,’” he said.

Credit cards fees that merchants pay tend to come in at between 1.5 and 2.5 per cent of transaction costs. Kelly said the sale of a $100 sweater, for example, would cost the merchant between $1.50 and $2.50.

That fee is then split between the credit card companies, such as Visa and MasterCard, the bank behind the card, and with the payment processor. Kelly said the reduced fees aren’t coming out of Stripe’s part of the transaction.

Kelly said the Liberals worked with credit card companies and the CFIB for a long time to come to an agreement to reduce fees

“Merchants have been waiting for the savings for like a year and a half and now, at the very end, those that are using Stripe, are learning that they’re actually not going to see any of these savings,” he said.

Stripe offers two pricing plans for its customers; one is a flat rate, which is not changing, and another called Interchange Plus, in which merchants pay whatever the current fees are, plus an additional payment to Stripe.

The company said anyone on the latter plan will see savings, but not those on the flat-rate plan. Stripe did not offer details on what percentage of their customers are on each plan.

“For businesses on Interchange Plus pricing, Stripe passes through all the network costs and fee changes, including the recent reduction in interchange fees for eligible businesses. In the aggregate, costs for processing payments in Canada have gone up, but we’ve decided to keep our standard pricing the same,” said a company spokesperson in an email to the National Post.

In addition to his affiliation with Stripe, Carney sits on several boards including charing Bloomberg L.P. and Brookfield Asset Management, an investment firm with over $1 trillion in assets under management.

In September, Carney was hired by the Liberal party to run a “leader’s task force” that is supposed to present new ideas to the party for economic growth, although so far Carney is the only member of the task force.

Kelly has published an open letter to Carney calling on him to use his power on Stripe’s board and encourage the company to lower fees.

“I’m leaving no stone left unturned, including calling on Mark Carney directly as board member to push for a different decision, especially given his role in advising the party that is putting these rules in place.”

Kelly said the issue is particularly acute for companies trying to move into online sales and e-commerce because Stripe is a major processor for companies who use Shopify.

Katherine Cuplinskas, a spokesperson for Finance Minister Chrystia Freeland, said they expect the reduction in fees to be passed along.

“The federal government is closely monitoring the implementation of the credit card fees reduction, with the strong expectation that all payment processors like Stripe will pass the savings on to small businesses,” she said in an email.

She said small businesses also have more ability to leave processors who don’t pass along the savings.

“Through the revised Credit Card Code of Conduct, small business owners also have more rights. They must be notified in advance if a processor is not passing on the savings from the fees reduction and they can now switch to a different processor without penalty.”

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