Visa and MasterCard have finally caved in to pressure from Canadian competition authorities and agreed to set a 1.5% ceiling on interchange rates in the country for the next five years.
The agreement follows a four-year battle between the card schemes and the federal Competition Bureau over interchange fees, which typically have fluctuated between 1.5% and three percent.
The Retail Council of Canada estimates that as much as $500 million from an annual $400 billion interchange surcharge will be saved through reducing rates.
Both Visa and MasterCard have talked up the voluntary nature of the deal, as opposed to the more binding regulatory measures that had been threatened.
In a statement, Visa says: "Visa enters into this undertaking with the full expectation that the government is committed to a level playing field. If Visa or our clients are disadvantaged as a result of entering into this undertaking, Visa reserves the right at any time to terminate or amend it."