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Interchange in Canada

Visa Canada and MasterCard® International Incorporated have recently announced fundamental structural changes to their "Interchange" rates. These changes affect all Canadian merchant acquiring banks, their processors and merchants that accept Visa/MasterCard. Changes begin taking effect in April, 2008.

Interchange rates are set by the bank card associations (Visa/MasterCard) and their major card-issuing banks. Interchange represents the majority of a merchant's discount rate (MDR) and the card issuers are the beneficiaries of these fees. The interchange fee that applies during a particular transaction is a function of many variables including the type of card and type of transactions. In general, business cards and rewards cards cost merchants more to process.

Interchange is a fee structure applied by the credit card payment networks when exchanging data and transferring costs between the credit card issuing banks and the merchant acquiring banks during a credit card transaction.

Changes in interchange fees or structure can lead to adjustments in the "merchant discount rate" (MDR) and per transaction fees merchants pay to accept credit cards.

Type of Card:

Corporate Card

A "Corporate Card" is a Visa card that is issued specifically to corporations and distinguished by a specific bank identification number. The Corporate Card includes a business and purchasing card.

Consumer Card

A "Consumer Card" is a Visa card that is not a Corporate Card.

Type of Transactions:

Electronic Transactions

An "Electronic Transaction" is a card-present transaction where:

  1. the magnetic stripe or chip on the card is read by a point-of-sale (POS) terminal;
  2. required data is transmitted in the authorization message; and
  3. the transaction is fully authorized online through VisaNet and cleared within three (3) days or less, excluding the purchase date, central processing date and Sundays.

Standard Transactions

A "Standard Transaction" is a card-not-present, "non-swipe" transaction that does not qualify as an Electronic Transaction.