Chase To Offer Canadian Small Businesses Lower Discount Rates for AmEx Payments

The Canadian Federation of Independent Business announced Monday an agreement with JPMorgan Chase & Co.’s Chase Merchant Services that the trade group of small and medium-sized merchants says could bring cuts of nearly 50% for accepting American Express Co. cards to its 110,000 members.

The Toronto-based CFIB said Chase, its merchant-acquiring referral partner, will offer base AmEx pricing of 1.68% of the sale with an assessment of 0.12%, for a total of 1.80% applicable to most industries. The rate is available to small businesses with less than C$500,000 ($385,500) in annual AmEx sales. Another 0.30% is added to card-not-present transactions, and large tickets have differing price points.

The CFIB’s new AmEx pricing is the last product of its drive to lower payment card acceptance costs in Canada, which are the subject of ongoing controversy. Last year, the group struck a deal with Mastercard Inc. to lower its members costs for accepting Mastercard cards by 12.5% or more.

The special AmEx pricing is available only to CFIB members that use Chase for merchant processing. About one-third of the members do so, according to Toronto’s Globe and Mail. The newspaper said small Canadian merchants typically pay 3% to 3.5% for AmEx transactions.

“This new deal is a big step forward for small business and recognizes their importance to the Canadian economy,” Dan Kelly, the CFIB’s president and chief executive, said in a news release. “Many of our members could see significant savings with the new offer, for some this could represent a rate reduction of almost 50%. This will benefit CFIB members by lowering the cost of offering AmEx as a payment option, while ultimately providing value to consumers with greater access and payment choice.”

The pact is part of AmEx’s OptBlue program to expand AmEx card acceptance among small merchants, according to the Globe and Mail. Under OptBlue, AmEx’s bank card merchant-acquirer partners set retail discount rates and provide consolidated account servicing and statements covering all of the major network brands.

“We are excited to see Chase and CFIB partner to bring American Express acceptance to more small merchants,” Kerri-Ann Santaguida, vice president and general manager of merchant services for American Express Canada, said in the release. “This is part of our ongoing commitment to the small-business community, designed to make it easier for them to do business with us by enabling acquirers like Chase to provide payment processing, servicing, and pricing to small merchants.”

Acceptance costs for general-purpose payment cards remain a hot topic in Canada, where Walmart Inc. refused to accept Visa Inc.’s cards at some stores in 2016 until the two companies came to an accord in early 2017. Some business organizations, pointing to lower acceptance costs in Europe and Australia, are pushing Canada’s national government to intervene in the card markets, according to the Globe and Mail. In response, the federal Department of Finance said it is meeting with networks, card issuers, acquirers, merchant groups, and consumer organizations about the issue.