The short version
Three things have happened simultaneously since 2024. Interchange rates — the fees Visa and Mastercard set that get paid to the cardholder's bank — went up across multiple card categories, particularly premium rewards cards. Network assessment fees (the cut Visa and Mastercard take for themselves) went up two consecutive years. And processor markup, the layer most merchants actually have some control over, drifted up as smaller processors got acquired and competitive pressure eased in the Canadian market.
The combined effect: a typical Canadian merchant's effective discount rate is roughly 12% to 22% higher than it was at the start of 2024. Not catastrophic on a single transaction. Substantial on a year of card volume.
Interchange: +0.10% to +0.15% on consumer credit, mostly on premium rewards cards.
Network assessment fees: +0.04% to +0.08% in cumulative Visa/Mastercard increases.
Processor markup: +0.05% to +0.12%, particularly on smaller merchants without volume leverage.
Total typical impact: 12% to 22% increase in effective rate over two years.
Premium card adoption is the quiet pressure
The single biggest driver isn't fee schedules — it's the customer's wallet. Canadians have been moving toward premium rewards cards at a steady clip since 2022. The cashback and travel rewards on these cards are funded primarily by higher interchange. Every time a customer pays with a premium card instead of a standard card, the merchant pays roughly 0.4% to 0.7% more for the privilege. For most Canadian merchants, premium card volume has gone from roughly 25% of total card volume in 2022 to roughly 35–40% by early 2026.
This shift compounds. A merchant whose card mix was 25% premium / 75% standard pays a different blended rate than one whose mix is 40% / 60%, even if the merchant hasn't changed processors and the underlying fee schedule hasn't moved much. The customer chose the more expensive card; the merchant absorbed the cost.
Network assessment fees keep ticking up
Visa and Mastercard both raised assessment fees in 2024 and again in 2025. These are small — typically 0.01% to 0.04% per round of increases — but they're applied across every transaction, and they don't reverse. The 2025 round in particular added a meaningful layer to international card transactions, which affects Canadian merchants serving tourist-heavy markets (Banff, Whistler, Niagara Falls, downtown Toronto, downtown Vancouver) more than merchants in less travelled regions.
Processor consolidation reduced competitive pressure
The Canadian processor market has consolidated meaningfully since 2022. Some of the smaller independent processors that historically priced aggressively to win business have been acquired or have moved upmarket. The result is that merchants who shopped competitively in 2022 and locked in tight pricing now find that when their contracts come up for renewal, the market has shifted. Fewer aggressive challengers means processors don't have to discount as hard to keep accounts.
This isn't universal — there are still aggressive ISOs and processors competing on price in the Canadian market — but the average merchant who renewed in 2025 paid more for the same service than they did in 2022.
What merchants can do about it
The fees themselves are mostly outside merchant control. Interchange is set by Visa and Mastercard. Assessment fees are set by Visa and Mastercard. Processor markup is the one layer where merchants can negotiate, and merchants doing more than $50,000 a month in card volume have meaningful leverage to renegotiate processor markup, particularly at renewal time. But the structural increases in interchange and assessment fees are baked in.
The other tool merchants have — and the one most relevant to this site — is credit card surcharging. Since the federal framework took effect in October 2022, Canadian merchants in every province except Quebec have been able to recover most of the processing cost directly from the customer paying by credit card. A 2.4% surcharge on credit card transactions, combined with no surcharge on debit, EFT, cheque, or cash, recovers most of the merchant's processing fees while giving customers a clear no-cost alternative. The merchants who set up programs in 2023 are insulated from much of the 2024–2026 fee inflation. The merchants who haven't are now absorbing 18% higher costs than they were two years ago.
"The fees aren't going down. They've never gone down. Every time someone in the ecosystem decides to raise a rate, it ripples through to the merchant in the form of a higher effective discount rate the next time the statement closes. The only question is who pays it — the merchant or the customer who chose the rewards card."
Surcharging is the only direct lever
There are other things merchants do to manage processing costs — switching to cash discount models (universal in Quebec where surcharging isn't permitted; less common elsewhere), renegotiating with processors, encouraging customers toward debit, accepting only certain card brands — but compliant surcharging is the only mechanism that directly passes the variable cost of credit card acceptance to the customer who's generating that cost. It's also the one mechanism that scales linearly with processing volume; a bigger merchant recovers more, a smaller merchant recovers less, but the math works the same way for both.
A typical Canadian small business doing $50,000 a month in card volume at a 2.3% effective rate pays roughly $13,800 a year in processing fees. A compliant surcharge program typically recovers 70% to 85% of that — roughly $9,500 to $11,700 — depending on how many customers shift to debit or cheque after the program launches. The surcharge calculator models the math against specific volumes.
The Quebec exception
One important caveat: Quebec is the only province where surcharging isn't permitted under the Consumer Protection Act. Quebec merchants who want to recover processing fees use a cash discount program instead — same economic effect, structured differently to comply with provincial law. The fee increases discussed in this article hit Quebec merchants exactly the same way as merchants elsewhere; only the response mechanism differs.
The setup process
For merchants outside Quebec, the surcharge program setup process is straightforward. Verify your processor and POS system handle surcharging, register with Visa and Mastercard (which triggers a 30-day notice period running in parallel for both networks), update your signage and customer-facing disclosures, brief your staff on the one-line script, and go live on day 31. Most Canadian merchants are up and running in 35 to 45 days. The registration guide covers the full sequence.
The bigger picture
Processing fees are likely to keep rising. Premium card adoption isn't going to reverse. Network assessment fees go up roughly every two years. Processor consolidation in Canada is largely complete, which limits competitive pressure. The merchants who are best positioned for the next round of increases — and there will be a next round, probably in 2027 — are the ones with programs already in place that pass the variable cost of credit card acceptance to the customers paying by credit card.
If you're a Canadian merchant outside Quebec and you haven't looked at whether a surcharge program makes sense for your business, this is a good year to do so. The fee increases of 2024–2026 made the math meaningfully better than it was when the framework first took effect in 2022. The merchants signing up now are catching up to where the early adopters were two years ago.