Canada cuts interchange, Klarna teams with Adyen

The Government of Canada has finalized agreements with San Francisco-based Visa and Purchase, N.Y.-based Mastercard to reduce the credit card interchange fees small businesses pay to banks for in-store transactions to 0.95% from about 1.4%, according to a press release on Tuesday. The card networks also agreed to adjust their rules so that interchange fees small businesses pay for online transactions will fall by 10 basis points. Agreements with the card networks, affecting more than 90% of Canada's credit card-accepting businesses, will take effect in the fall of 2024, the release said. Overall, small businesses' interchange fees will decline by about 27% from existing levels, amounting to small-business savings of about $1 billion over five years, the release said. 

Currently the average interchange fee for a credit card processed in Canada on Visa's network is 1.4% and some credit cards charge merchants up to 3% per transaction, CBC News reported earlier this year. Jurisdictions in Asia, Europe and the U.K. have cut credit card interchange below 1% in recent years. In the U.S.,the Federal Reserve recently proposed lowering the cap on debit card interchange, while Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan., are co-sponsoring the Credit Card Competition Act which aims to cut credit card interchange fees for merchants by mandating a lower-cost card-processing option. —Kate Fitzgerald

Dublin-based Synch Payments DAC, an instant account-to-account mobile payments service planned by a coalition of Irish banks in 2020, has ceased operations after determining its business plan wasn't feasible, according to a press release. Yippay, supported by the Bank of Ireland, Permanent TSB and KBC, among other large banks, envisioned developing a simple mobile app supporting all payment types, but the concept fizzled due to a combination of factors, the release said. Fintech Futures reports that despite hiring Italy-based payments technology firm Nexi and receiving permission from Ireland's central bank to build the app, further development would require approval from the EU. —Kate Fitzgerald

Swedish lender Klarna has expanded its partnership with Dutch payment processor Adyen, which has long offered Klarna's buy now/pay later product over its network of more than 150 million consumers and 500,000 retail clients. Adyen will now serve as Klarna's merchant acquirer, commencing in Europe, North America and Asia in 2024. The deal will add payment flexibility and improve processing speed, Adyen contends. "Adyen's financial technology platform combined with Klarna's various consumer offerings will raise the standard of payments and consumer experiences worldwide," said Pieter van der Does, co-founder and co-CEO of Adyen, in a release. Klarna, which recently returned to profitability after about four years, has been adding new services in multiple markets as it attempts to recover from a slump that has impacted the entire financial technology market. Adyen has bolstered its point-of-sale payments technology over that past year as it expands in the U.S. and other markets outside of Europe. —John Adams