Credit Card Processing Fees in Canada

Jack Prenter, Founder of Dollarwise

Credit card processing fees in Canada are the charges imposed on businesses when they accept credit card payments. These fees are a pivotal aspect of the financial landscape, impacting both merchants and consumers alike. 

They comprise various costs levied by credit card networks, banks, and payment processors, exerting an influence on the overall pricing structure of goods and services.

When a customer pays using a credit card, the merchant incurs expenses associated with processing that transaction. These expenses cover a range of fees, including interchange fees, assessment fees, and processing fees.

This article delves deeper into the details of credit card processing fees in Canada, shedding light on the fundamental components and their impact on businesses and consumers alike.

How do credit card processing fees work?

When you make a purchase using a credit card, the merchant not only receives the payment but also incurs fees for processing that transaction. These fees are a composite of several components, primarily the interchange fees established by credit card networks like Visa, Mastercard, and others.

Interchange fees are influenced by various factors such as the type of card used (e.g., rewards cards, premium cards), the nature of the transaction (in-store, online, contactless), and the merchant’s industry. These fees typically comprise a percentage of the transaction value coupled with a flat fee per transaction, varying based on these aforementioned factors.

For consumers, being aware of these fees helps in understanding how they might indirectly impact pricing, rewards systems, and overall costs incurred when using credit cards for purchases.

That is why you should also possess knowledge about the different types of processing fees associated with credit cards which we will explain below.

Credit card processing fee types

Credit card processing fees in Canada consist of 7 different types, each with its own quirks and features. These include:

1. Interchange fees

These fees, determined by credit card networks such as Visa and Mastercard, fluctuate based on factors like card type, transaction method, and merchant category, forming a significant portion of the costs for merchants processing card payments.

This fee is split between the card network and the bank that issued the card. 

2. Assessment fees

Assessment fees, regulated by card networks, involve a small percentage added to each transaction’s value, contributing to the overall expense of credit card acceptance for businesses.

Usually, these fees are between 0.08% and 0.09% of the transaction but, it’s actually a monthly fee (not per transaction) that is based on the merchant’s monthly sales. Any such assessment fee that is higher than 0.10% could be a red flag. 

3. Terminal fees

Terminal fees encompass expenses related to acquiring or renting card terminals or point-of-sale (POS) systems essential for processing credit card transactions in-store or online. 

These fees can be approached in one of two ways. 

The first is paying for the POS system(s) up front, while the other is leasing them from the parent company. 

Paying for it upfront guarantees that you won’t have to think about monthly terminal fees for the foreseeable future; at least until the time comes for an upgrade. 

On the other hand, leasing it generally allows you to swap out the system for another one at no additional cost. 

4. Processor markup fees

Processor markup fees constitute supplementary charges imposed by payment processors for their services, including transaction processing, security measures, and customer support. 

This fee is almost always a fixed amount, to the tune of roughly 10¢. 

5. PCI fees

The PCI (Payment Card Industry) fee is a charge for compliance with data security standards mandated by the PCI Security Standards Council, ensuring secure handling of cardholder information.

There are two ways to pay this fee – either monthly (e.g. $4/month) or annually (e.g. $89/year). The credit card company is the one who processes this fee. 

6. Payment gateway fees

Payment gateway fees refer to costs associated with the service that facilitates online transactions by securely transmitting card information between merchants and payment processors.

Again, this fee can be paid on a monthly basis or per item. In essence, this fee connects a merchant account with your online store. 

7. Incidental fees

And finally, we have incidental fees. 

Incidental fees consist of miscellaneous charges not included in the aforementioned categories, potentially involving penalties, retrieval requests, or chargebacks, impacting merchants’ overall expenses.

Factors used to calculate credit card fees

There are a few factors that contribute to how much a merchant will be charged for each transaction. 

Type of transaction

Interchange fees depend primarily on the type of transaction taking place. There are 4 transaction types that can occur: 

  • Contactless
  • Card present
  • Card not present
  • Online shopping (and other types of digital commerce)

Type of card being used

As far as the card types are concerned, these only matter if the user has a Visa or Mastercard card. Any other cards generally don’t impact credit card fees So, when it comes to the two aforementioned credit card networks, the fees grow with each card tier. 


  • Core (regular card, cheapest fees)
  • World (mid-range card and fees)
  • World Elite (high-end card with high fees)


  • Classic, Gold, Platinum (regular cards, cheapest fees)
  • Infinite (mid-range card and fees)
  • Infinite Privilege (high-end card with high fees)

It’s also worth noting that American Express cards don’t have classifications like Mastercard and Visa but the merchant type does impact the fees associated with Amex cards. 

Type of credit card network being used

The choice of credit card network, be it Visa, Mastercard, or American Express, can slightly impact the fees merchants incur during credit card transactions. Visa and Mastercard, being open-loop networks, generally exhibit lower interchange fees compared to American Express, a closed-loop network. 

Visa and Mastercard, due to their widespread acceptance and larger market share in Canada, tend to have more standardized fee structures and lower interchange rates across various card types, contributing to comparatively lower processing costs for merchants.

No matter which card type we’re talking about, both Visa and Mastercard have a minimum and maximum fee associated with their cards. 


  • Minimum: 0.8%
  • Maximum: 2.45%


  • Minimum: 0.87%
  • Maximum: 2.42%

While these differences are negligible for smaller amounts, the 0.07% and 0.03% differences, respectively, do add up as the amounts go up. 

In contrast, American Express, operating as a closed-loop network and issuing its cards directly, often has higher processing fees. Despite offering premium rewards and exclusive benefits to cardholders, these higher fees can lead to increased costs for businesses that accept American Express cards. 

Here’s a quick look at what the fees look like:

Retail1.60% – 2.00%
Restaurant1.60% – 2.40%
Healthcare1.60% – 2.00%
Internet & Mail Order1.60% – 2.00%
Services1.60% – 2.00%
B2B/Wholesale1.60% – 2.40%
Entertainment & Travel1.60% – 2.40%
Other1.60% – 2.00%

Cards with the cheapest processing fees in Canada

In order to deduce which credit cards are the cheapest option (lowest fees) for specific transactional purposes, we’ll take a look at all 3 types of credit cards (Standard, Premium, Ultra Premium).

We’ll also be using 3 purchase examples/types for this analysis – Contactless, Chip, and Online purchases. 

Standard card processing fees


  • Visa: 1.25%
  • Mastercard: 0.87%


  • Visa: 1.25%
  • Mastercard: 0.92%


  • Visa: 1.40%
  • Mastercard: 1.67%

When using these cards, it’s best to use Mastercard for in-store purchases and Visa for online payments. This makes sense since Visa is advertised as an excellent option for online purchases and there are many bonuses associated with it (the same goes for Mastercard and in-store purchases)

Premium credit card processing fees


  • Visa: 1.57%
  • Mastercard: 1.16%


  • Visa: 1.57%
  • Mastercard: 1.22%


  • Visa: 1.65%
  • Mastercard: 1.90%

Premium cards often have numerous benefits and rewards that you can earn using them and in that regard, Visa is the better choice (as it is for online purchases). 

Mastercard still has lower fees in the Contactless and Chip categories but due to weaker bonuses, its edge over Visa isn’t as pronounced as in the Standard cards category. 

Ultra-premium processing fees


  • Visa: 2.08%
  • Mastercard: 1.48%


  • Visa: 2.08%
  • Mastercard: 1.56%


  • Visa: 2.40%
  • Mastercard: 2.13%

Finally, in the Ultra-Premium category, the Mastercard (World Elite) is finally a slightly better option than Visa (Infinite) cards. 

However, this card category often brings an even higher number of bonuses so fees aren’t as much of a factor in this comparison. 

How to reduce processing fees?

Small businesses have a few ways of reducing the fees they accrue from credit card usage. Let’s start with the most ‘drastic’ one:

Avoid accepting credit cards as a payment option

While it may not be feasible for all businesses, limiting credit card acceptance can reduce associated fees. Establishing a cash or debit-only policy for small transactions or specific services can help mitigate the impact of processing fees. 

However, this strategy requires careful consideration, as it might affect customer convenience and potentially lead to decreased sales. Balancing the cost savings from reduced fees against potential revenue loss is essential when contemplating this approach.

Motivate customers to use debit or cash

If you don’t want to get rid of credit cards altogether, it might be worth providing your customers with certain benefits if they choose to pay in cash or debit. 

Educating customers about the cost implications of credit card transactions and highlighting the benefits of using alternate payment methods can positively influence their choice at the point of sale.

Don’t accept amex cards

Opting not to accept American Express cards can be a strategic move to reduce processing fees. While Amex cards often provide attractive rewards, their higher interchange fees can substantially impact a business’s bottom line. 

However, businesses need to assess the potential impact on sales and customer satisfaction before implementing this strategy, as some customers prefer using American Express for its perks and benefits.

Don’t allow online payments

For brick-and-mortar businesses, limiting or discontinuing online payments can help decrease processing fees associated with e-commerce transactions. Redirecting sales to in-store purchases or alternate payment methods can reduce the costs incurred from online processing fees. 

Nonetheless, this tactic needs to be properly assessed, as the shift away from online sales might affect customer convenience and overall revenue.

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