Interchange Fee Cuts: Is Your Restaurant Still Overpaying?

A 40-seat independent restaurant in Toronto doing $600,000 a year in revenue processes roughly 75% of that through credit cards. At a 2.5% effective rate, that's $11,250 a year in card processing fees. For a business running on 3 to 5% net margins, processing fees eat nearly as much as the profit.

In October 2024, the federal government activated new agreements with Visa and Mastercard that cut interchange fees for qualifying small businesses by up to 27%. That's a real reduction for the majority of independent restaurants in Canada. But "qualifying" and "actually receiving the savings" are two different things. Some processors committed to passing on the cuts. Others haven't. And most restaurant owners have never checked.

What actually changed

Interchange fees are the largest component of what you pay to accept credit cards. They flow from your processor to the card-issuing bank (the bank that gave your customer their Visa or Mastercard). Before October 2024, the weighted average interchange rate for in-store consumer credit transactions sat around 1.4% for Visa and 1.2% for Mastercard.

Under the new agreements, both networks reduced domestic consumer credit interchange for qualifying small businesses to a weighted average of 0.95% for in-store transactions. Online transactions dropped by 10 basis points (roughly 7% lower).

Here's what that looks like for specific card types, using CFIB's published rate tables:

Card Type	Previous Rate	New Small Merchant Rate	Savings per $100K
Visa Classic/Gold/Platinum	1.25%	0.81%	$440
Visa Infinite	1.57%	0.99%	$580
Visa Infinite Privilege	2.08%	1.80%	$280
Mastercard Core	0.92%	0.72%	$200
Mastercard World	1.22%	0.95%	$270
Mastercard World Elite	1.56%	1.22%	$340

The savings are significant on the cards your customers use most. A restaurant processing $300,000 in annual credit card volume could save $1,000 to $1,400 per year on interchange alone, depending on card mix.

Do you qualify?

Most independent restaurants do. The thresholds are:

• Visa: under $300,000 in annual Visa credit card sales
• Mastercard: under $175,000 in annual Mastercard credit card sales

You qualify with each network separately. A restaurant doing $250,000 in Visa sales and $150,000 in Mastercard sales qualifies for both. New businesses automatically qualify, with eligibility reassessed annually.

For context, more than 90% of credit-card-accepting businesses in Canada fall under these thresholds. Unless you're a high-volume multi-location operation, you're almost certainly eligible.

The real question: did your processor pass it on?

Here's where it gets frustrating. The fee cuts are between Visa, Mastercard, and the federal government. Your payment processor is the middleman. They're expected to pass the savings through to you, but not all of them have.

CFIB surveyed the major processors. The results split three ways:

Committed to passing on savings: Moneris, Square (Block), Shopify, TD Bank Merchant Services, Chase, Global Payments

Confirmed they will NOT pass on savings: Stripe, Lightspeed, Freshbooks

Unclear or no response: Fiserv (First Data), Nuvei, Adyen, Elavon, QuickBooks

If you're on Stripe's standard pricing or Lightspeed's built-in processing, you're paying the same rate you were before the cuts. The savings are going to your processor, not to you.

How to check your rate

Pull your last three monthly processing statements. Look for these numbers:

If you're on interchange-plus pricing (the most transparent model), your statement should show the actual interchange rate per transaction plus a fixed processor markup. Compare the interchange rates against the new small merchant rates in the table above. If you're still seeing Visa Classic at 1.25% instead of 0.81%, the cuts haven't flowed through.

If you're on flat-rate or blended pricing (one rate for all transactions), the math is less clear. CFIB suggests checking whether your overall rate dropped by at least 6% after October 2024. For Visa-specific transactions, look for a 20 to 25% reduction. For Mastercard, 20% or more.

If you can't read your statement (and many can't, because processor statements are designed to be confusing), call your processor and ask directly: "Am I receiving the October 2024 small merchant interchange rate reductions?" Get the answer in writing.

Your right to leave without penalty

This is the part most restaurant owners don't know about. The revised Code of Conduct for the Payment Card Industry, which took effect October 30, 2024, includes a specific protection: if your processor doesn't pass on a reduction in interchange fees, you have 70 calendar days from the effective date to cancel your contract without any penalty.

That means no early termination fees. No equipment buyout charges. Nothing. The revised Code also requires processors to notify you if they're not passing on fee reductions in full, and to remind you of your right to cancel.

If your processor didn't send that notification, they may be in violation of the Code. You can report it to the Financial Consumer Agency of Canada or contact CFIB if you're a member.

Interchange-plus vs. flat rate: which costs less?

This is worth understanding because the pricing model you're on determines whether you'll ever see interchange savings at all.

Model	How It Works	Transparency	Who Benefits
Interchange-plus	Actual interchange rate + fixed processor markup (e.g., interchange + 0.40% + $0.08)	High. You see every rate.	Restaurants processing over ~$10K/month. Savings flow through automatically.
Flat rate	Single blended rate for all cards (e.g., 2.65% + $0.10)	Low. You can't see the interchange component.	Processors. They keep the difference when interchange drops.
Tiered	Transactions sorted into "qualified," "mid-qualified," "non-qualified" buckets	Very low. Buckets are processor-defined.	Processors. The most opaque model.

For a typical independent restaurant, interchange-plus pricing will almost always cost less. On a $60 average ticket with mostly in-store transactions, the difference can be 0.3 to 0.5% per transaction. Over $400,000 in annual card volume, that's $1,200 to $2,000.

And critically, interchange-plus is the only model where government-negotiated rate cuts automatically show up on your statement. On flat rate, the processor absorbs the savings.

What about Interac debit?

This is one area where Canadian restaurants have a genuine advantage. Interac debit transactions cost a flat fee, typically $0.04 to $0.10 per transaction, regardless of amount. On a $60 dinner, that's 0.07 to 0.17%, compared to 2 to 3% for credit.

Interac debit is 8 to 15 times cheaper than credit on a typical restaurant ticket. You can't force customers to use debit over credit, but understanding the cost difference matters for your own financial planning. If 40% of your transactions are debit and 60% credit, your blended cost is materially lower than your credit-only rate suggests.

Surcharging: the nuclear option

Since 2022, Canadian businesses outside Quebec can add a surcharge of up to 2.4% on credit card transactions. You have to notify Visa and Mastercard 30 days in advance, clearly disclose the fee before the transaction, and let customers choose an alternative payment method.

Restaurants Canada has cautioned against it. In hospitality, where you're building relationships and repeat visits, a surcharge at the table creates a negative moment at exactly the wrong time. The math might make sense. The guest experience rarely does.

In Quebec, surcharging is prohibited entirely under provincial consumer protection rules.

Our position: if your processing fees are high enough that surcharging feels necessary, you're probably on the wrong pricing model or with the wrong processor. Fix the root cause first.

The five-minute action plan

1. Check your eligibility. Pull your annual Visa and Mastercard volumes. Under $300K Visa and $175K Mastercard? You qualify.
2. Check your pricing model. Interchange-plus, flat rate, or tiered? If you don't know, call your processor.
3. Check your statements. Compare your October 2024 and later interchange rates against the new small merchant rates in the table above.
4. Ask your processor. If savings aren't showing, ask directly. Get a written response.
5. Switch if needed. You have the right to cancel without penalty if savings weren't passed on. Shop around. CFIB members can access pre-negotiated rates through Chase.

For a restaurant processing $300,000 to $500,000 in annual credit card volume, the difference between an optimized interchange-plus arrangement and a flat-rate plan with no fee pass-through can easily be $2,000 to $3,500 a year. That's a month's worth of produce for most independents.

Sources: Government of Canada, CFIB, Financial Consumer Agency of Canada, Clearly Payments, Restaurants Canada.

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