Fees, pricing models and 2026 rules
Merchant payment processing fees in Canada: what you pay and why (2026)
How card processing fees are built for Canadian small businesses, from interchange and network fees to markup, Interac debit, terminals and the 2026 rules.
A Canadian merchant's card processing cost comes from three layers on every credit card sale: interchange, which goes to the bank that issued the customer's card; network or assessment fees, which go to the card brand such as Visa or Mastercard; and the processor's markup, which pays the company that connects you to the networks and deposits the money. Interac debit is priced differently, usually as a flat fee per transaction. On top of those per-sale costs sit fixed fees: terminal rental, monthly account fees, PCI programme fees, gateway fees and POS software. Your real cost is the total of all of it divided by your card sales, which is your effective rate.
This page is the overview for the fees and rules section. It explains each layer, the pricing models processors use, and the rules in force in Canada as of October 2026. All rates on this page are illustrative examples, not any processor's prices.
The layers of a card fee
| Layer | Who receives it | Who sets it | Can you negotiate it? |
|---|---|---|---|
| Interchange | The card issuer (the customer's bank) | The card network, by card type, merchant category and how the card is used | No, but it changes with how customers pay |
| Network / assessment fees | The card network | The card network | No |
| Processor markup | Your acquirer or processor, and any reseller | The processor | Yes |
| Fixed and one-off fees | Processor, gateway, POS or leasing company | Each provider | Often |
Interchange is the largest part of most credit card fees. It is higher for premium and business cards than for standard consumer cards, and higher for online or keyed payments than for card-present payments. The detailed breakdown is in interchange, network fees and processor markup.
A worked illustrative month
The figures below are invented round numbers to show how a bill adds up. They are not quotes.
| Line | Illustrative amount |
|---|---|
| Credit card sales: $9,000 over 250 transactions | – |
| Interac debit sales: $6,000 over 250 transactions | – |
| Credit interchange and network fees at about 1.5% | $135.00 |
| Processor markup on credit: 0.25% + $0.08 per transaction | $22.50 + $20.00 |
| Interac debit at $0.10 per transaction | $25.00 |
| Terminal rental | $25.00 |
| Monthly account and PCI programme fees | $15.00 |
| Total | $242.50 |
Total card sales are $15,000, so the effective rate is $242.50 ÷ $15,000 = 1.62%. The same business on a flat 2.65% on all cards would pay $397.50 plus any fixed fees. A flat plan that includes the terminal and has no monthly fees might still be simpler. Neither result applies to your business until you run your own mix through the card fee calculator or the monthly cost estimator.
The four common pricing models
Processors wrap these layers into one of four pricing structures:
- Flat or blended rate: one percentage (sometimes plus a per-transaction fee) for all cards, or one per payment method. Simple, predictable, and usually more expensive per dollar for debit-heavy or standard-card businesses.
- Interchange-plus: interchange and network fees passed through at cost, plus a fixed markup. Transparent, and reductions in interchange reach you directly.
- Tiered: transactions are sorted into qualified, mid-qualified and non-qualified buckets. The processor chooses which cards land where.
- Subscription: a monthly fee plus cost, sometimes with a small per-transaction fee.
The trade-offs are compared in flat rate vs interchange-plus vs tiered vs subscription and in the pricing models table.
Interac debit is a separate price
Interac is Canada's domestic debit network. Merchant pricing for Interac debit is usually a flat amount per transaction, so a $12 coffee and a $400 repair bill cost the same to accept. That makes debit cheap for larger tickets and relatively more expensive for very small ones. Some flat-rate plans instead charge debit as a percentage, which can be costly on big tickets. See Interac debit fees for small businesses.
The rules in force in 2026
Four sets of rules shape what you pay and what you can do about it:
- The Code of Conduct for the Payment Card Industry in Canada. The revised Code took effect on 30 October 2024, replacing the 2015 version. It requires clear disclosures, 30 to 60 calendar days' notice of fee increases, a 70-day window to leave without penalty after an increase, limits on automatic renewal, and the freedom to accept credit without debit or the reverse. The Financial Consumer Agency of Canada (FCAC) supervises the networks' compliance. See merchant rights under the Code.
- The small business interchange reduction. Finance Canada announced that from 19 October 2024 Visa and Mastercard lowered credit card interchange for eligible small businesses. See the 2024 small business reduction.
- Surcharging. Outside Quebec, merchants may add a surcharge to credit card payments within network limits and disclosure rules. In Quebec, surcharges are not allowed. See credit card surcharge rules.
- Tax. Core processing fees are generally exempt financial services for GST/HST, while terminal rental and equipment are generally taxable. See GST/HST on processing fees and terminals.
Separately, the Retail Payment Activities Act requires most non-bank payment service providers to register with the Bank of Canada; you can check a provider in the public registry, as explained in RPAA registration checks.
Where fees hide outside the rate
Beyond the per-transaction fees, check your statement and agreement for: monthly minimums, statement fees, PCI programme and non-compliance fees, chargeback and retrieval fees, batch or settlement fees, gateway fees, early termination fees and equipment lease payments. These are covered in the pitfalls and official sources section, including PCI compliance fees and chargeback costs.
When to get professional help
For a long-term contract, an equipment lease, very high volume, or a dispute about fees you believe were not disclosed, speak to a lawyer or an accountant. The FCAC does not resolve individual disputes, but you can report possible Code breaches to it, and processors must run a complaints process with set timelines.
FAQ
What is a normal effective rate for a small business?
It depends on your mix of debit, standard credit, premium credit and online payments, so there is no single normal rate. A debit-heavy store with large tickets can have a low effective rate; an online business with many premium cards will have a much higher one. Calculate yours from a statement rather than relying on averages.
Why is my rate different from the one I was quoted?
Quotes often show the rate for one card type or one entry method. Premium cards, business cards, foreign cards and keyed payments can carry higher rates, and fixed fees raise the effective rate. The Code requires a cost per transaction disclosure so that you can see the different rates in advance.
Are processing fees tax deductible?
Card processing fees are generally a deductible business expense for income tax purposes. Ask your accountant how to record them, especially if fees are deducted from deposits rather than invoiced.
Sources
- Financial Consumer Agency of Canada — Code of Conduct, merchant rights, surcharge rules
- FCAC: Accepting card payments — merchant guidance pages
- Department of Finance Canada — small business interchange announcement (October 2024)
- Bank of Canada — retail payments supervision and PSP registry
- Canada Revenue Agency — GST/HST on financial services and equipment
