Interchange fees in Canada: how card processing fees really work

Follow a $100 credit-card sale

When a customer pays you $100 on a credit card, the fee you pay splits three ways before any of it reaches your processor.

Interchange is the largest piece — between 70% and 90% of the total cost of accepting a card, according to the Business Development Bank of Canada. It does not go to your processor. It flows, through your acquirer, to the bank that issued your customer's card, at rates the card networks set and publish in open schedules (Visa explains the system here). Processors cannot negotiate the published default interchange down for your transactions — comparable transactions attract the same scheduled rate regardless of provider.

Network assessments are the smaller slice Visa and Mastercard themselves collect for running the rails. Fiserv Canada, for example, passes these through at roughly 0.10% of volume.

Processor markup is everything left over — and it is the only component your provider actually sets. Industry estimates put typical markup at roughly 0.15%–0.35% plus $0.05–$0.12 per transaction (ClearlyPayments), though on blended pricing you will never see it broken out. When two providers quote you different prices, this slice is the entire difference.

So on that $100 sale: interchange might take $1.25 on a common Visa Classic/Gold/Platinum card — up to $2.08 on the premium Infinite Privilege — assessments take about a dime, and the markup takes whatever your pricing model was designed to keep quiet.

What interchange actually costs in Canada, as of July 2026

Interchange varies by card product, by channel (in-store vs. online), and even by merchant category — Visa's grocery rates start at 0.95%, for example. Here are the headline in-store consumer credit rates as of July 2026, from Visa Canada's published schedule and TD's April 2026 interchange schedule, which reflects Mastercard's current rates:

Two things jump out. First, premium and rewards cards cost you more: issuers use interchange to help fund card rewards, which is why premium tiers cost more — so a share of your customers' travel points is, in effect, funded on your bill. Second, the "standard/default" tiers are the most expensive rows: they apply when a transaction doesn't qualify for a better category, which is one reason downgrades matter so much (more on that below).

Visa has also committed to keeping its average domestic consumer credit interchange at 1.40% (a voluntary commitment with the Department of Finance, per Visa's interchange page), and has announced changes to card-not-present rates taking effect October 24, 2026 (Visa's notice) — if you sell online, expect your cost floor to shift this fall.

Ottawa already cut interchange for small businesses — check that you got it

Effective October 19, 2024, the federal government's agreements with Visa and Mastercard gave qualifying small businesses — under $300,000 in annual Visa volume, or under $175,000 in Mastercard volume, assessed per network — a 0.95% weighted-average interchange rate on in-store consumer credit transactions, plus a 10-basis-point reduction online. The Department of Finance put the value at up to a 27% reduction, worth about $1 billion over five years, and said more than 90% of card-accepting businesses qualify.

Here's the catch: the reduction lands at the processor first, and the government's announcement says it "expects" processors to pass the savings along — an expectation, not a mechanism. The CFIB publicly called out Stripe for keeping its flat rates unchanged when the cut took effect — a saving secured by Ottawa that flat-rate merchants never saw. If you're under those volume thresholds and your pricing didn't move in late 2024, that is a fair and pointed question for your processor.

Where the margin hides: three pricing models

Interchange-plus passes through the true interchange and assessments and adds a stated markup on top. It's the most transparent structure — you can see exactly what the provider keeps.

Blended and tiered pricing quote one rate, or "qualified / mid-qualified / non-qualified" buckets. Real costs and markup are fused together, and transactions that miss the conditions of your quoted tier get downgraded into pricier buckets. The margin is invisible by design.

Flat-rate pricing charges the same on every card. Simple — but you pay premium-card prices on the cheapest cards, and, as the Stripe episode showed, when interchange falls, a flat rate doesn't have to.

This is why the honest comparison number is your effective rate: total fees divided by total card volume. It's now official vocabulary, too — the revised Code of Conduct for the Payment Card Industry (October 2024) requires your monthly statement to show your effective rate per card type, requires a fee-disclosure box in quotes and agreements, and gives you 70 days to exit without penalty if your provider raises fees — a right that also applies when an interchange reduction like October 2024's isn't passed through to you in full. It's also why Newdays states its credit rate as a real, all-in number — 1.5% on Visa and Mastercard, 1.8% on American Express — the same effective rate your statement must now disclose, rather than an "as low as" teaser. For a tour of the fixed fees that live in the gap between a teaser rate and an effective rate, see Credit card processing fees in Canada: junk fees explained.

Why is Interac debit so much cheaper than credit cards?

Because Interac charges flat fees, not percentages. The network's costs are fixed cents per transaction — a switch fee of about 1.4 cents (Interac), with contactless debit tiers running roughly 2.0 to 5.5 cents (Helcim's breakdown) — so the total network cost of an in-store debit sale is around five cents whether the ticket is $10 or $1,000.

Put that against credit: as of July 2026, a $100 in-store contactless sale on a Mastercard World Elite card carries about $1.56 in interchange alone (TD's schedule) — roughly thirty times the Interac cost.

That contrast is why Newdays prices Interac as a flat per-transaction fee (from 3.9¢ on a chip insert to 5.9¢ on a contactless tap) instead of a percentage. And to hold ourselves to the same transparency standard: Interac's network fees are a few cents, and our flat 3.9–5.9¢ sits right beside that wholesale cost rather than scaling above it — a disclosed flat price, printed on the page, not a claim of "at cost." For more on how debit pricing works and where percentage-priced debit quietly overcharges, see Interac fees for merchants: flat fee vs percentage in Canada.

How much should card processing cost in Canada?

Build it from the floor up. As of July 2026, your true cost floor on in-store consumer credit is interchange (0.92%–2.08% on most consumer cards, or the 0.95% weighted average if you qualify under the federal agreements) plus roughly 0.10% in network assessments. Everything above that is your provider's margin and fixed fees — the part worth scrutinizing.

For reference, Newdays' standard pricing as of July 2026 is a 1.5% credit rate on Visa and Mastercard — the real rate, not a teaser — plus a flat Interac fee from 3.9¢ (chip) to 5.9¢ (contactless tap) and terminal rentals from $25 to $60 per month, with volume pricing for high-volume merchants and a personal account manager with 24/7 trilingual support (English, Korean, Vietnamese) included.

For merchants who would rather have credit costs carried by the customers who choose credit, Newdays also offers a Zero-Cost Credit Card Processing program (as of July 2026): 0% credit-card processing fees for the merchant, with the program's 2.4% credit rate passed in full to the customer as a disclosed surcharge — the surcharge equals your cost of acceptance and never exceeds the 2.4% network cap. On the program you still pay a flat Interac fee (from 3.9¢ per transaction) plus terminal rental (from $30/month, available with Clover terminals); it applies to credit cards only, and it isn't available in Quebec. If you're weighing that route, start with Credit card surcharging in Ontario: dos, don'ts, customer reactions.

What should you ask your processor this month?

Three questions, each with official backing:

1. "What is my effective rate, per card type?" Under the Code of Conduct it belongs on your monthly statement. Divide total fees by total volume yourself and see whether the numbers agree.
2. "Did you pass through the October 2024 interchange reduction?" If you're under $300,000 in Visa volume or $175,000 in Mastercard volume and your pricing never moved, ask where the 0.95% rate went.
3. "Which lines are pass-through, and which are yours?" A provider pricing honestly can split every charge into interchange, assessments, and markup without flinching.

If the answers are fuzzy, send us a statement — whether you run a salon, convenience store, or restaurant in the GTA, we'll do a free, line-by-line review within 24 hours, no obligation, and show you your real effective rate against the interchange you should be paying. And if the numbers say it's time to move, the Code's 70-day exit window may already be open: see How to switch payment processors in Canada without downtime.

This article is general information about payment-industry pricing in Canada, not legal or tax advice.